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FREE TRADE vs. PROTECTION 



Free Trade 



vs. 



Protection 



BY 
AMASA M. EATON, A. M., LL.B. 




CHICAGO 
A. C. McCLURG & CO. 

1913 



&$ 



Copyright 

A. C. McClurg & Co. 

1913 



Published June, 1913 



W. F. HALL PRINTING COMPANY, CHICAGO 



^>CI.A350313 



PREFACE 

^T^HIS is not an attempt at a learned book on the 
-*• vexed subject of free trade against protection. 
It is an attempt to interest the average American 
citizen in the subject, to show him what free trade is 
(meaning thereby a tariff for revenue only) and its 
advantages; and what protection is and its disad- 
vantages. Statistics have been avoided as much as 
possible, as well as any elaborate citation of author- 
ities for statements made. Entertaining a feeling of 
contempt for protection, I mean to be outspoken in 
denunciation of its pretensions, follies, absurdities, 
inconsistencies, arrogance, charlatanry and humbug- 
gery. In my opinion, it is a fertile source of fraud 
and corruption, and its elimination as soon as is prac- 
ticable, with due regard to the interests that have 
been fostered under its baneful influence, has now 
become a moral necessity. Detrimental to the inter- 
ests of the consumer, it is also injurious to the pro- 
ducer, by inducing him to lean upon the government 
for " protection," instead of relying upon his own 
resources and powers. 

My book is controversial, aggressive, and con- 
temptuous, for it has been my purpose to give my 
protectionist antagonists the same treatment they 

v 



vi Preface 

give free traders (meaning always by free traders 
those who stand for a tariff for revenue only). 

If it be objected that I repeat myself over and 
over again, I admit it, and I reply that I have done 
so of set purpose, because through reiteration I hope 
to drive home my argument. 

We Americans pride ourselves on our country, 
its size, its magnificent dual form of govern- 
ment, its wonderful natural resources in coal, iron, 
copper, gold, silver, forests, mountains, plains, prai- 
ries, lakes that are inland seas, the opportunities we 
offer to every comer, our public school system, our 
constructive and business ability, our great railroad 
systems, our inventive genius, our telegraphs and 
telephones, our banks, immense wealth, enormous 
volume of business, our cotton, wheat, corn, tobacco, 
etc., and, in general, our ability to take the lead 
and to beat the world in anything we choose to 
undertake. Indeed, we are credited not only with 
having this very high opinion of ourselves, but also 
with a certain measure of success that shows our 
claim is well founded. 

Yet it is a certain source of satisfaction to foreign- 
ers when they find that, in spite of all these extrava- 
gant claims and success in establishing them, a ma- 
jority of Americans admit that we cannot stand up 
against the inferiorities of the rest of the world 
unless we "protect" ourselves against them. 

The remarkable part of this admission is that 



Preface vii 

the weaker the foreigner, the more ignorant he is, 
the less capacity or skill he has, the greater the 
necessity for protection against him. I confess I 
have never been able to get over the surprise with 
which I first learned of the absolute necessity as a 
sine qua non, if a country would succeed, of this 
kind of protection of the strong against the weak of 
this earth. I had always supposed that the weak 
needed protection from the strong, but I learned that 
the stronger and abler and more efficient a nation 
becomes, the greater is the necessity for " protect- 
ing" it against the inefficiency and incompetency of 
the weak. Mark Twain is the only writer who could 
have done justice to the logic of such a doctrine, and 
I will not pursue the subject further. 

I maintain that the violent shock to importation 
by the Embargo Act and the War of 18 12-15, 
with the legislation following that war, gave an 
impetus to the textile industries of cotton and wool 
and to the iron and steel industries that were all the 
protection they needed, if they ever needed any, which 
I deny; that they were successfully established busi* 
nesses in 1846, when the Walker tariff was adopted, 
and long before that time, and from that day to this 
have never needed protection even if protection be 
sometimes allowable in such a case as that laid down 
by Mill* 

* Principles of Political Economy, bk. V, Ch. 10, §1. 



viii Preface 

I contend that the protection given by the tariff 
since the war has been a very saturnalia of protec- 
tion, and that at this time this country is the last one 
in the world that needs protection or in which any 
good reason can be given why it should be continued. 

With the expenses of the Civil War there came, 
necessarily, taxation to met those expenses. Every- 
thing was taxed, and, under the name of inter- 
nal revenue, excise taxes were imposed. So long as 
the excise tax w r as equivalent to the import duty on 
the same article it made no difference to the country, 
nor to the consumer, whether the home-made article 
or the imported one was bought and used. The con- 
sumer paid the same price for either and the tax on 
either went into the treasury of the United States. 
But this balance was disturbed when the duty re- 
mained unchanged, and the excise tax was reduced 
and finally abolished. This was equivalent to in- 
creased protection, just as if the duty had been raised 
and the excise tax had remained as it was. Excise 
taxes were odious to our people and there was a 
clamor for their reduction and removal. Protec- 
tionists were adroit enough to see what an advan- 
tage they would gain by the course taken, and, so 
far as I am able to learn, no one pointed out ade- 
quately the wrong done by reducing excise duties 
without equivalent reduction of import duties. 

Had the proper relation between the two been 
preserved we might have been during all these years, 



Preface ix 

and we might be now, under free trade, by which I 
mean a tariff for revenue only. 

This failure of free traders to insist upon main- 
taining an equivalence between excise dues and 
tariff dues is but a part of the failure on their part 
to maintain the lead that was theirs prior to the 
Civil War through the success of the system looking 
towards free trade (meaning a tariff for revenue 
only), bound to end, if maintained, in such free 
trade. I am unable to say why free traders lost 
their grip after i860. It will remain for some future 
historian to determine why it was that protectionists 
gradually took the initiative and soon became ag- 
gressive, dominant, and domineering; and such is 
their attitude now. It is an attitude of lordly supe- 
riority, of aggressive assertion of claims ever rising 
in the scale of contemptuous disregard of anything 
and everything militating against their theories, and 
this has resulted in a common belief on the part of 
a majority of the American people that a doubter of 
the virtues of protection is a man to be shunned, 
a man whose judgment is not to be trusted, and who, 
even if he has a right to doubt the merits of protec- 
tion, ought to keep his views to himself. I think it 
is time for free traders (meaning those who want a 
tariff for revenue only) to quit the defensive and to 
take the offensive with some of the aggressiveness of 
protectionists. The spirit of satire and ridicule with 
which Bastiat and Sumner met the absurd claims, 



x Preface 

sophistical reasoning, and charlatanry of protection- 
ism should be encouraged and freely used by free 
traders. The fact that all through my book I am 
obliged to define what I mean by u free trade" when 
I use the term, shows how protectionists have suc- 
ceeded in obscuring its true meaning, as well as the 
meekness and want of self-assertion with which free 
traders have calmly submitted to this obscuration. 

I think, further, the time has come when free 
traders should dwell more not only upon the 
inherent immorality of protection, but also upon 
what I consider to be established fact — the fraud 
and corruption that protection breeds. No one can 
deliberately and judicially study the history of the 
successive tariff revisions of the past fifty years with- 
out coming to the conclusion that each one is at- 
tended by more and more misrepresentation, lobby- 
ing in its worst forms, and greediness in securing 
more special favor by each particular interest, com- 
bined with " log-rolling" or pooling of interests to 
secure benefits for all in the pool. So far has this 
been carried that it has become the controlling force 
in screwing up protection ever higher and higher, 
even when the mandate of the country has been in 
favor of reduction. While admitting the value of 
the researches of Edward Stanwood as published in 
his American Tariff Controversies in the Nineteenth 
Century, I think he is entirely in error when he says, 
"There has never been a time in the history of the 



Preface xi 

country when the predominant motive to protection 
was found in a selfish wish of manufacturers that 
the government should increase their profits by lay- 
ing heavy duties upon foreign goods." He admits 
that such a motive has been present, and that it has 
been aggressive and occasionally offensive. Simi- 
larly, I admit that many protectionists are perfectly 
honest and sincere in their advocacy of protection, 
but I maintain that now and for many years our over- 
weighted system of protection has been and is main- 
tained by the organized greed and selfishness of the 
great protected industries of the country, supported 
by the general ignorance of our people as to what 
free trade really is, and the aggressive, supercilious 
tone of protectionism, always on the alert to retain 
all the protection it has gained and to gain more 
whenever it can. Protection is the Old Man of the 
Sea that has got on our backs, and the question now 
is how we are to get rid of it. 

I ask my readers to remember that by free trade 
I mean a tariff for revenue only. It might not 
be necessary to repeat this constantly, but protection- 
ists perversely insist upon misusing the term and 
many persons who are not protectionists are so hazy 
in their understanding of what free trade is, that I 
am obliged to say over and over again that by free 
trade, I mean a tariff for revenue only. I do not 
mean by free trade the abolition of all custom houses, 
the abandonment of all duties on imports, absolute 



xii Preface 

free trade such as exists between the states of our 
Union. Great Britain is a free trade country in the 
proper sense of the term; she has custom houses and 
has a tariff for revenue only, with hardly any excep- 
tion. Yet in the same breath protectionists will 
speak of England as a free trade country — and will 
ask you if, being a free trader, you intend to abolish 
all custom houses ! 

For their kindness in permitting me to use extracts 
from the undermentioned books, my thanks are ten- 
dered to authors and publishers: Miss Ida M. Tar- 
bell, The Tariff in Our Times, the Macmillan Co. ; 
Prof. F. W. Taussig, Tariff History of the United 
States, G. P. Putnam's Sons; Mr. Edward Stan- 
wood, American Tariff Controversies in the Nine' 
teenth Century, Houghton Mifflin Co. 



CONTENTS 



I Definitions . . . 
II Commerce .... 

III Commerce (Continued) 

IV Commerce (Continued) 
V Free Trade .... 

VI Free Trade (Continued) 

VII Protection 

VIII Protection (Continued) 
IX Protection (Continued. 
X Protection (Continued) 
XI Protection (Continued) 
XII Wages 

XIII Protection Not Necessary 

the United States .... 

XIV Protection Not Necessary in 

the United States (Continued) 

XV Protection Not Necessary in 

the United States (Continued) 

XVI Protection Not Necessary in 

the United States (Continued) 

XVII The Remedy 264 



IN 



PAGE 
I 
18 

35 

57 
72 

85 

99 

118 

133 
149 

168 

184 

203 

218 

234 

250 



Free Trade vs. Protection 



CHAPTER I 

DEFINITIONS 
MEANING OF THE WORD " TARIFF " 

npHE origin of this word shows the antiquity of 
-*■ protection and the hollowness and absurdity of 
the claim made by protectionists in the United States 
that it is an American system. Tarifa was a town 
and a castle, about twenty miles from Gibraltar, 
where Moorish pirates exacted tribute from passing 
vessels for about eight centuries during the Moham- 
medan sway in Spain. The same system has existed 
for centuries in China, under which " squeeze sta- 
tions," so called, exacted and still exact tolls from 
every passing vessel. For ages the robber barons 
of European feudalism levied a similar toll on com- 
merce. Adam Smith, in The Wealth of Nations, 
says, "The protection of trade in general from 
pirates and freebooters is said to have given occasion 
to the first institution of the duties of customs." 
When Mr. Roosevelt, in his carefully prepared ad- 
dress in Providence in August, 1912, spoke of "the 
prize money" of protection, his language was 

1 



Free Trade vs. Protection 



logical, though it conceded more than he meant to 
concede. 

As now carried out in this country, protection is 
the levying of a toll or tax, called a duty, for the 
benefit of those modern pirates and freebooters, the 
big interests and trusts. If objection is urged to the 
use in this connection of such hard words, we will 
soften our language by calling them, more politely, 
11 privateers," since they are licensed by law to levy 
this prize money, more of which, Mr. Roosevelt says, 
ought to go to the working class. But whoever gave 
to protection the name of "the American system" 
was either ignorant of history or had unlimited 
audacity, for the system existed for centuries before 
the United States were dreamed of, and long before 
the laws of political economy were known. 

LIMITED MEANING OF " PROTECTION " IN THE 
UNITED STATES 

The particular meaning of protection, as the word 
is used in this country, is the system favored by Ham- 
ilton, for which much may be said in the infancy of 
a country, i. e., the development of manufacturing 
industries by means of discriminating duties upon 
foreign manufactured goods. But the term has a 
much wider meaning, i. e., all the means by which a 
country may undertake to secure the industrial and 
commercial development of all its resources. This 



Definitions 



would include the broad field of the development of 
the welfare of the country, the making of thorough 
geological, botanical, and other surveys of the land, 
to discover and to open up the vast wealth of its nat- 
ural resources in its mines, forests, fields, waterfalls, 
etc. ; the establishment of experiment stations to test 
the usefulness of new crops and fruits ; to study means 
for making all crops more bountiful, the improve- 
ment of stock, and the introduction of new kinds; 
the preservation of the country's wild animals, game, 
and fishes; the stocking of our forests and waters 
with game and fishes of improved quality; and, what 
is of more importance than all these, the care and 
improvement of the human race, mentally and phys- 
ically; or, to sum it all up, the conservation and 
improvement of all the gifts of divine Providence. 

A REAL AMERICAN SYSTEM 

The true American doctrine is that of equal 
opportunities to all, so far as legislation is con- 
cerned, with no special privileges granted to any by 
legislation. 

MEANING OF " PROTECTION " AS OPPOSED TO " FREE 
TRADE V 

The word " protection " is used in a very different 
sense, a much narrower one — one, indeed, that 
means the exhaustion, instead of the conservation, 



Free Trade vs. Protection 



of such of our natural resources as it has succeeded 
in bringing under its blighting influence. As opposed 
to free trade, it means the protection (a) of the cap- 
italists engaged in manufacturing, mining, etc.; (K) 
of the laborers engaged in the mills, machine shops, 
mines, etc., of these capitalists; or (c) of the con- 
sumers of their products. The latter may be dis- 
missed at once from further consideration, for it can- 
not be claimed that consumers get any protection 
under this ki< d of protection. According to the 
unexpressed ideas of protectionists, they exist for 
the purpose of being exploited by the producers. 

Protection for the benefit of the capitalist pro- 
ducers, or for the benefit of the laborers employed 
in such production, or for the benefit of both, is 
claimed to be secured through duties on manufac- 
tured or raw products brought into this country from 
other countries, the ostensible object of these duties 
being the raising of revenue with which to meet the 
expenses of government. But these two objects are 
antagonistic and inconsistent, for if duties are high 
enough to protect, they yield little or no revenue, 
while if they are low enough to yield revenue, they 
fail to protect. Protectionists answer this by citing 
the large sum produced by the tariff, running up into 
hundreds of millions of dollars, while the very exist- 
ence of this large sum is cited by other protection- 
ists, especially by those wanting protection who have 
not yet got it, as proof that the duties are not yet 



Definitions 



high enough to keep out foreign goods. What they 
want is not protection, but prohibition. The history 
of the tariff is, therefore, a history of the struggle 
between those who want a tariff for revenue (which, 
as we shall see, is free trade) and those who want a 
tariff for protection, even prohibition if necessary, 
to keep out foreign goods; and of the legislation 
enacted for the purpose of bringing about one or the 
other of these results. 

MEANING OF " FREE TRADE" AS OPPOSED TO 
" PROTECTION" 

Like the word " protection," the words "free 
trade" have many meanings. Primarily, they sug- 
gest freedom, the opposite of slavery, i. e., liberty, 
the right to trade as one wills, without restraint or 
limitation. Such a conception of free trade is in 
keeping with our free institutions and with all the 
great principles of freedom of the Anglo-Saxon 
blood — a part of the very being of Englishmen and 
Americans, like free speech, a free press, free 
schools, a free ballot, a free church and churches. 
In the abstract, free trade is the application in eco- 
nomics of the principle of the freedom, the right, the 
liberty, of every member of the community to carry 
on any legitimate business as he pleases, with free- 
dom to buy in any market and to sell in any market, 
free from interference. This is absolute free trade; 






Free Trade vs. Protection 



not, however, the free trade that is found anywhere 
between states, except within the United States. It 
is incompatible with the existence of a custom house 
where duties are collected upon imports to furnish 
funds for the expenses of government. We find, 
therefore, that the words " f ree trade" are used 
politically in a very different and much narrower 
sense. As opposed to protection, free trade means 
trade or commerce subject only to such duties on 
imports at the custom house as are necessary to raise 
revenue for the expenses of government; as opposed 
to that system, known as protection, that imposes 
duties on imports ostensibly to raise revenue for 
the expenses of government, but in reality to stimu- 
late home production and to diminish, and finally to 
put an end to, the importation of such imports. 

That eminent authority, David A. Wells, who 
began public life as an ardent protectionist, but who 
became a more ardent free trader, as the result of 
his practical experience and greater knowledge, de- 
fined free trade as the right of every man to ex- 
change freely the products of his labor and services 
in such a way as may seem to him most advantage- 
ous, subject only to such restrictions as the State may 
find it necessary to impose for the purpose of reve- 
nue or to maintain the public health. Conversely, 
he defined it as the denial of the right of a free 
government to take arbitrarily from anyone any por- 
tion of the product of his labor, services, or skill, 



Definitions 



for the benefit of another, without making com- 
pensation therefor. 

The following definition is acceptable to free trad- 
ers, and as it comes from a representative protection- 
ist of high standing, it should also be acceptable to 
protectionists. I quote from the Philadelphia Amer- 
ican of August 7, 1884: 

The term free trade, although much discussed, is 
seldom rightly defined. It does not mean the aboli- 
tion of custom houses. Nor does it mean the 
substitution of direct for indirect taxation, as a few 
American disciples of the school have supposed. 
It means such an adjustment of the taxes on imports 
as will cause no diversion of capital from any chan- 
nel opened or favored by the legislation which enacts 
the customs. - A country may collect its entire revenue 
by duties on imports and yet be an entirely free trade 
country, so long as it does not lay those duties in such 
a way as to lead anyone to undertake any employ- 
ment or make any investment he would avoid in the 
absence of such duties. Thus, the customs duties 
levied by England, with a very few exceptions, are 
not inconsistent with her profession of being a coun- 
try that believes in free trade. They either are duties 
on articles not produced in England, or they are 
exactly equivalent to the excise duties levied on the 
same articles if made at home. They do not lead 
anyone to put his money into the home production 
of an article, because they do not discriminate in 
favor of the home producer. It is, therefore, no 



Free Trade vs. Protection 



concession to the protective principle when the 
Democratic platform says that " since the founda- 
tion of the government, custom house duties have 
furnished its main source of revenue " and " this 
system must continue/' A protective duty, on the 
other hand, has for its object to effect the diversion 
of a part of the capital and labor of the people out 
of the channels in which it would run otherwise, 
into channels favored or created by law. 

I use the term " free trade " in the same sense that 
protectionists use it in when they say that England 
is a free trade country. The trouble with them is 
that they do not stick to that sense. 

INSTANCES OF WANT OF UNDERSTANDING THAT 
FREE TRADE MEANS A TARIFF FOR REVENUE ONLY 

In a speech before the Senate, April 29, 1909, 
Senator Rayner said: 

The Senator from Rhode Island, in a brief 
discussion that took place a few weeks ago over the 
practice that obtained before the finance committee, 
boldly stated in this presence that a tariff for revenue 
and free trade were identically one and the same 
thing. This is the first time that I have ever heard 
the proposition thus announced. I have never 
come across a passage upon the pages of political 
economy; I have never heard a practical expert or 
statistician treat the subject from this standpoint. 
I have always considered that free trade between 



Definitions 9 

this country and other countries meant the abolition 
of custom house duties, and, if I am permitted to 
say so, I think that the Senator confuses fair compe- 
tition with free trade. 

What a strange state of mind this shows ! Here is 
Senator Aldrich, the great leader of the high pro- 
tectionists, always ready to raise a duty, who admits 
(correctly) that free trade means a tariff for reve- 
nue. On the other hand is Senator Rayner, a 
Democrat, opposed to protection, who has never 
heard that a tariff for revenue and free trade are 
identically one and the same thing ! It would be no 
more astonishing had he stated that he had never 
heard that England is a free trade country! 

In 1883 J. G. Carlisle had not grown to an under- 
standing of the term "free trade." He said: 

In the broad and sweeping sense which the term 
usually implies, I am not a free trader. I will add 
that in my judgment it will be years yet before 
anything in the nature of free trade would be wise 
or practicable in the United States. When we speak 
of this subject we refer to approximate free trade 
which has no idea of cutting the growth of home 
industries, but simply of scaling down the inequali- 
ties of the tariff schedules where they are utterly 
out of proportion to the demands of that growth. 
After we have calmly stood up and allowed 
monopolies to grow fat, we should not be asked to 
make them bloated. Our enormous surplus revenues 



10 Free Trade vs. Protection 

are illogical and oppressive. It is entirely undemo- 
cratic to continue these burdens on the people for 
years and years after the requirements of protection 
have been met, and the representatives of these 
industries have become incrusted with wealth. 

Even Stanwood, clear thinker and exact writer as 
he is, sometimes seems confused in his use of the 
term free trade. Thus (Vol. 2, p. 210)* he says, 
correctly, "The revenue reformers, or free traders, 
were aggressive, patient, persistent, . . ." etc. 
Again (p. 227), he says, correctly, ". . . free trade, 
that is, to a system of tariff taxation which not 
merely does not give i incidental protection,' but is 
contrived with the express purpose of excluding pro- 
tection." But at the foot of page 229 he says, 

11 Now they were, in following the recommendations 
of the President, to base their action upon the stock 
arguments, the only logical conclusion of which was 
absolute free trade." Herein he is entirely in error 
and confused in thought. No free trader (meaning 
one who believes in a tariff for revenue only) is an 
absolute free trader, nor does he seek the abolition 
of our custom houses. An absolute free trader is 
one who would abolish all custom houses, and, there- 
fore, he does not believe in a tariff for revenue only 
— he would have no tariff at all, no revenue from a 
tariff. The position really held by free traders 
(meaning those who believe in a tariff for revenue 

* American Tariff Controversies in the Nineteenth Century. 



Definitions II 

only) cannot be better expressed than in StanwoocTs 
own words (p. 23 1 ) , " The theory which he and his 
party associates held, that the tariff must be reduced 
in the interest of the great body of the people, and 
with no other tenderness for the so-called rights of 
manufacturers than was necessary to avoid a too 
abrupt and injurious change . . ." 

MEANING OF A TARIFF FOR REVENUE WITH INCI- 
DENTAL PROTECTION 

A tariff for revenue with incidental protection is 
one based upon the supposition that, by arranging 
a scale of duties so moderate as only to restrict and 
not to prevent importation, it is possible to secure 
revenue for the government and to stimulate domes- 
tic manufactures at the same time by thus raising the 
price of competitive foreign goods. This double 
object is undoubtedly possible, but it is one of the 
most costly of all the methods of raising revenue. 
For, while revenue to the government accrues only 
from the duties levied and paid on what is imported, 
another and a much greater tax is paid by all the 
consumers of the country on the domestic products 
thus " protected," sold, and consumed in place of the 
foreign products thus kept out of the country. It is 
attended by the further disadvantage that as imports 
are thus kept out of the country exports of our own 
products are kept in the country; for commerce or 



\ 



12 Free Trade vs. Protection 

trade between the merchants of different countries 
consists in the exchange of goods, products, etc. 
There cannot be exports unless there are imports; 
there cannot be imports unless there are exports. We 
cannot become great exporters unless we become 
great importers. When we shut out foreign prod- 
ucts we shut in home products. The same Chinese 
wall, the tariff, that keeps out foreign goods keeps 
in home goods. A tariff for revenue so adjusted as 
to afford incidental protection is, therefore, a system 
that requires all consumers — that is, the whole 
people — to pay much in order that the government 
may receive a little. The difference is an extra profit 
pocketed by the manufacturers or the protected 
interests, or it is so much less loss than the ineffi- 
cient among them would otherwise suffer if their 
business be of such a nature that it could not be car- 
ried on profitably without protection except through 
high efficiency. Again I repeat the term " free 
trade is used in two different senses. It may mean 
absolute freedom of trade (and the closing of all 
custom houses) or it may mean the opposite of pro- 
tection, i. e., customs duties, properly levied, for 
revenue only. I repeat this because protectionists 
will persist in using the term sometimes in one sense, 
sometimes in the other sense, and sometimes, when 
unusually perverse, they use it in both senses at the 
same time. 

This tendency of protectionists to use the term 



Definitions 13 

" free trade " with a wrong meaning is illustrated by 
what Representative Fairchild of New York said in 
a speech in Congress, February 14, 191 1, "Scratch 
the skin of the average 'tariff for revenue only' 
Democrat and you will find the blood of a free 
trader." Here we see the sophist confounding the 
real meaning of the words he uses, probably pur- 
posely, in order to arrive at a result that he must 
know is false. If he does not know it, he ought to. 
The tariff for revenue man is a free trader, be he a 
Republican or be he a Democrat; the free trader is 
a tariff for revenue man, be he a Democrat or be he 
a Republican. 

In a speech in 1882 Senator Frye of Maine said: 

I am a protectionist from principle. If there were 
no public debt, no interest to pay, no pension list, 
no army and no navy to support, I still should oppose 
free trade and its twin sister, tariff for revenue only, 
and favor protective duties. 

One may excuse a good deal as the mere exuber- 
ance of unpremeditated oratory, but one does not 
expect to meet such ignorance in an educated United 
States Senator. 

Let it not be forgotten that revenue through cus- 
toms duties is received only as foreign goods are let 
in, while protection operates only in so far as foreign 
goods are kept out. The two are antagonistic, not 
part of one whole. 



14 Free Trade vs. Protection 

MEANING OF A TARIFF FOR REVENUE ONLY 

A tariff for revenue only is a tariff so framed that 
the government shall receive all the duties paid by 
the people and that no money in the form of in- 
creased prices because of the tariff, shall be paid by 
consumers to producers. If duties are high enough 
to stop imports, no revenue is received by the gov- 
ernment, yet consumers pay nearly the same high 
prices for all the home products they buy as if they 
were all imported and paid the duties. So the con- 
sumers pay nearly the same sum as the duties (be- 
sides the real cost of the goods), but to the pro- 
ducers and not to the government. All duties on 
imports should now gradually be so fixed as to yield 
the greatest revenue to the government. It fre- 
quently happens that a reduction in a duty brings 
about an increase in revenue, the larger amount im- 
ported in consequence of the reduction, more than 
making up for the loss through the lower rate. The 
problem of the American statesman today is to keep 
on gradually reducing the duty so long as the reve- 
nue therefrom increases in amount. When duties 
gradually reduced bring less revenue, then the rates 
are too low (if the object be to produce the largest 
revenue possible). When there is a surplus, duties 
may be so far diminished as to stop any increase of 
surplus. 

Professor Taussig says that the claim that any 



Definitions 15 



duty whatever is inconsistent with the principles of 
free trade (meaning by free trade a tariff for rev- 
enue only) is erroneous, for it is only the duty that 
causes the substitution of a domestic product for an 
imported product that conflicts with the principles of 
free trade. 

Profesor Perry thus defines free trade : 

Free trade is the opposite of protection so called, 
and not of customs duties properly levied for rev- 
enue, . . . and is completely realized in any 
country whenever any tariff tax is laid solely for the 
sake of the revenue to be derived from it. When 
used in its legitimate sense, the word " protection " 
is an honest and needful word: when used in 
reference to tariff taxes it is full of deceit. 

Professor Sumner calls free trade "a mode of 
liberty." 

Of course, where the principle here contended for 
is consistently followed, a duty at the custom house 
on an article must be accompanied by an excise or 
internal revenue tax of the same amount on the 
domestic product. The two systems of taxation oper- 
ate only to bring in revenue to the government* with- 
out interference with the laws of trade or influence 
upon the development of industries within the coun- 
try, and everyone is left free to buy either the 
domestic or the foreign product, according to his 
taste or his purse. 



16 Free Trade vs. Protection 

Both terms, " free trade" and ''protection," are 
unfortunate, for both have two or more meanings, 
"Free trade" is not absolute free trade, and "pro- 
tection " does not protect, in the sense in which the 
term is misleadingly used by protectionists. " Free 
trade" means only so much free trade as is con- 
sistent with the admitted necessity of raising revenue 
through customs duties. " Protection " protects only 
the pocket of the manufacturer, not that of the work- 
man, nor of the consumer. The first term is used 
incorrectly by protectionists to cast discredit on free 
trade in its meaning as used by its adherents (a tariff 
for revenue only) , while the second term is used in a 
sense that throws a false glamour over it. There is 
no political party in this country seeking absolute 
free trade — the abolition of all duties, with conse- 
quent abolition of our custom houses. But the coun- 
try is awakening to the fact that protection, as now 
carried out, results in prize money, a plundering of 
the many for the benefit of the few. Instead of " a 
more equitable division of the prize money" that 
Mr. Roosevelt calls for, let us slowly, gradually, 
efficiently, modify and finally abolish or reduce to 
its lowest terms, the abominable system. 

Free trade is in harmony with the spirit of prog- 
ress of our people and our age, while protection is 
directly opposed to it. We are steadily progressing 
in the direction of freedom in many different ways: 
freedom of the person, and this has resulted in the 



Definitions ly 



abolition of slavery; freedom of opinion; freedom 
of the press; freedom of the state from any church, 
and of all churches from the state; freedom of 
travel, with the right of expatriation, freedom to 
choose one's country. It is strange that a great 
American political party, accepting the moral prin- 
ciple of personal freedom, or liberty, and the aboli- 
tion of slavery, should have gradually fallen a victim 
to the wiles of the economic slavery of protection, 
the negation of freedom of trade. The spirit of free 
trade is the spirit of peace and good-will to all on 
earth; the spirit of the golden rule, to do unto others 
as we would have them do unto us — that cardinal 
principle and the real essence of Christianity. In a 
notable sermon a leading divine has said that no 
one can be both a protectionist and a Christian, for 
protection is the denial of the golden rule. When 
protectionism recognizes the principle, as it does, 
that the government may take a part of one man's 
industry, through taxation, to enable another man 
to carry on a business he could not otherwise carry 
on, it is engaged in socialism of the worst type. 



CHAPTER II 

COMMERCE 

COMMERCE IS EXCHANGE WITH BENEFIT TO BOTH 
PARTIES 

LET us begin with some of the elementary princi- 
ples of commerce. Take the case of two boys, 
A. and B., who swap jackknives. A. wants to swap 
because B.'s knife has a large blade that he, A., 
wants for some particular purpose. B. wants to 
swap because A.'s knife has a small blade that he, B., 
wants for some particular purpose. They swap, and 
both gain by the transaction. Here you have an epit- 
ome of all commerce. It is trade, barter, exchange 
of something for something, with benefit to both par- 
ties to the transaction. If money enters into it the 
result is the same, whether they are in one state or 
are separated by a state line. Now, let us suppose 
that A. stands in Maine and B. stands in Canada and 
the swap above described takes place across the 
imaginary line constituting the boundary line be- 
tween Maine and Canada. Do the two boys cease 
to gain something by their exchange of jackknives? 
The free trader (meaning always one who believes 
in a tariff for revenue only) answers that it makes 
no difference whether both boys are in the same state 

18 



Commerce 19 



or in different states; that what is true of this trade 
between two boys would be equally true of trade 
or commerce between ten, a thousand, or a million 
men trading with each other; whether all were in 
Maine or all in Canada; whether some were in 
Maine and others in other states of the Union, or in 
any other part of the world; or whether all were on 
the earth or some up in the air in balloons or aero- 
planes and some in mines in the bowels of the earth. 

A CASE OF BARTER 

Suppose A. wants B.'s knife so much that he offers 
B. something to boot, say, a top. Is the exchange 
any the less advantageous to both? A. would not 
make the offer did he not think so. B. would not 
accept it did he not also think it would result in 
advantage to him also. We trust them and all others 
to make their own trade or to learn to trade differ- 
ently the next time. Again this is but an epitome of 
commerce. What is true of these two boys is true of 
all mankind. They engage in commerce because it is 
mutually profitable. Were it not, commerce would 
stop. 

Suppose that, instead of giving a top to boot, A. 
gives a cent besides his knife in exchange for B.'s 
knife. Or suppose, foreseeing he may some time 
need his knife again, A. keeps it and pays B. two 
cents for B.'s knife. Does that make any difference ? 






20 Free Trade vs. Protection 

In all these cases, whether it be boys swapping jack- 
knives by barter or by purchase and sale for money, 
or a multitude of men engaged in commercial trans- 
actions with each other, the answer of the free trader 
is the same: Let them alone; let them make their 
own bargains. We omit here the necessity that gov- 
ernments are under of raising a revenue, to consider 
it later on. 

Free trade between the inhabitants of different 
States benefits them all. It makes no difference 
whether these states are states of a union or whether 
they are states that are not united; whether they are 
States spelled with a capital S or states spelled with 
a small s; whether they are contiguous states or 
states that are as far apart as the poles. 

Protectionists deny this; they claim that, while the 
inhabitants of the same state or union of states may 
safely be left to trade with each other as they please, 
they must not be allowed to do so if they are at 
opposite sides of the boundary line between two 
states, except under state regulation. They assign 
at least two reasons for this difference. They are 
important and will be considered in detail later; at 
present I shall only state them : 

i. Because the inhabitants of one country will 
grow richer and those of the other country will grow 
poorer. 

Therefore, the state must interfere and tax the 
commerce of these people with each other. This 



Commerce 21 



rests upon belief in the Mercantile Theory of Com- 
merce, of which more later. 

2. Because the inhabitants of a country should 
produce all that is needed in that country. 

Therefore, the state must discriminate and favor 
production by customs duties on what they think 
should be produced at home, rather than elsewhere, 
and should repress imports by taxing them. 

Protectionists favor intrastate commerce, but not 
interstate commerce, (with other nations). 

Protectionists draw a line against fredom of com- 
merce just where race or political or religious differ- 
ences have placed it, i. e., the boundary line that 
separates one country, state, or nation from another 
country, state, or nation. They would change it at 
every change of boundary line. Intrastate freedom 
of commerce is all right, they say, but interstate 
freedom of commerce is another matter. 

Protectionists are not cosmopolitan — their hori- 
zon is limited to their own nationality. Free traders 
are broader-minded, and u no pent-up Utica con- 
tracts their powers." 

COMMERCE IS TRADE BETWEEN MEN, NOT BETWEEN 
COUNTRIES 

Protectionists constantly err in treating commerce 
as taking place between countries, whereas it takes 
place only between men. Moreover, the men en- 



22 Free Trade vs. Protection 

gaged in commerce may be inhabitants of one coun- 
try or of different countries — that is, an American 
living in New York may engage in commerce be- 
tween some port in China and some port in Japan; 
an Englishman living in India may engage in 
commerce between some port in Japan and some 
port in China; or a German living in Paris may en- 
gage in both branches of such commerce and carry 
on commerce not only between some port in China 
and some port in Japan, but he may also engage in 
commerce between some port in Japan and some 
port in China. There is no end to the possible com- 
plications of relationship between men engaged in 
commerce. They have one common feature that 
protectionists are unable to grasp — that commerce 
results in economic advantage to the men on both 
sides engaged in it, and also to the inhabitants of 
both countries who buy or sell these imports, or who 
sell or buy these exports. Were this not so, com- 
merce would come to an end. It is only by a figure 
of speech we say that countries trade with each other. 
Taken literally, we are led into error. To say that 
nations engage in commerce is a mistaken figure of 
speech carelessly indulged in by loose-thinking pro- 
tectionists. 

Even Stanwood speaks of exporting and importing 
as being carried on by countries,* "Not a single 

^American Tariff Controversies in the Nineteenth Century, vol. 
2, p. 68. 



Commerce 23 



example can be cited of a serious decline in the im- 
ports of one nation from another because of a 
refusal of the second country to buy the products 
of the first. On the other hand, examples by the 
score can be had, taken almost at random, of increas- 
ing export trade to one country by another which 
placed great, even prohibitory, obstacles in the way 
of importations from the country to which it sold 
freely." It will be claimed that it is only a figure 
of speech that is used when we speak of countries 
as exporting and importing, to which the reply is 
that figures of speech are to be avoided when we are 
trying to deal with definite conceptions. The use of 
figures of speech in a different sense than the natural 
one of the words used, certainly conduces to loose- 
ness of thought, and that is perhaps the reason why 
we gather from the whole of the page noted that 
the author fails to realize that the operations of 
commerce may affect at the same time the interests 
of the inhabitants of several countries. 

COMMERCE IS MUTUALLY BENEFICIAL, WHETHER 

BETWEEN THE INHABITANTS OF ONE STATE 

OR OF DIFFERENT STATES 

Suppose the Mississippi River divided the United 
States into two countries, would not Texans still be 
benefited by exchanging their cotton for hay, pota- 
toes, or white pine lumber from Maine? Maine 
might tax imports of cotton into Maine and force 



24 Free Trade vs. Protection 

her citizens to raise cotton under glass (to protect 
this infant industry). But she would lose her Texan 
market for her hay, potatoes, or white pine, or 
perhaps all of them. Texas might tax the hay im- 
ported from Maine and force her citizens to raise 
Bermuda or some other grass as a substitute (to 
protect this new and feeble industry), and Texans 
might substitute home-raised sweet potatoes for 
Maine potatoes. But then Texans would lose their 
market in Maine for their cotton. The same results 
would follow whether Maine and Texas were in 
the same country or in different countries. If the 
Civil War had resulted in the dismemberment of 
our country and we were now forty-eight independ- 
ent states instead of being the United States with 
forty-eight component states, free trade would 
equally be an economic advantage to all. 

COMMERCE BENEFITS BOTH PARTIES 

If, in a primitive condition of society, one man 
makes all the shoes and another makes all the coats, 
and the shoemaker exchanges a pair of his shoes for 
a coat of the coatmaker, both are benefited or they 
would not make the exchange. If the coat is worth 
more than the shoes and the shoemaker pays a dollar 
and a pair of shoes in exchange for the coat, again 
both are benefited. If the shoemaker keeps his shoes 
and pays ten dollars for the coat, still both profit. 
And it makes no difference where they live, whether 



Commerce 25 



in the same state or country or in different states or 
countries. In every case each one has obtained what 
he wanted more and has parted with what he wanted 
less. Multiply by millions the number of persons 
trading with each other and the result is the same. 
Man cannot improve upon the economic laws of 
nature. It is only because of the necessity for a 
revenue with which to pay the expenses of govern- 
ment that he is warranted in interfering, and the less 
he interferes, the better. 

EXAMPLE OF THE BENEFICENT RESULTS OF 
COMMERCE 

Merchant A. (it matters not what his nationality 
nor where he lives) sends a vessel from New York 
to some port in Europe, laden with grain, or some 
other American product that has cost him $200,000, 
according to the custom house entry. A. sells the 
cargo at ten per cent profit on its original cost after 
paying all expenses, or $20,000. (We leave out of 
account the foreign duty, for it is paid ultimately 
by the foreign purchaser-consumer.) A. directs that 
his proceeds of the sale of this cargo be put into 
specified foreign products for which there is a good 
demand in the United States. When this cargo 
reaches New York it may have cost ten per cent 
additional for the expenses incurred, or $242,000 in 
all, at which valuation it is entered in the New York 



26 Free Trade vs. Protection 

custom house. A. then sells the return cargo at ten 
per cent profit on its cost in Europe, or $22,000 
after paying all expenses, leaving out of account the 
American duty, which is paid ultimately by the 
American purchaser-consumer. Along comes a pro- 
tectionist, a believer in the effete system of political 
economy taught everywhere until Adam Smith, in 
The Wealth of Nations, taught the world better, 
and, upon examining the custom house records, he 
learns that A. has exported $200,000 worth of 
American products and has imported $242,000 
worth of foreign products, and he comes to the 
sapient conclusion that, as this country has exported 
$200,000 worth of American products and has im- 
ported $242,000 worth of European products, she 
has spent $42,000 out of her capital, is rapidly im- 
poverishing herself, and is therefore on the road to 
ruin, remembering always that our example deals 
with one case only, while his examination of the 
custom house records deals with thousands of such 
cases. 

But A. has on deposit in his bank in New York 
his two profits, one of $20,000 on his outward ven- 
ture and another of $22,000 on his homeward ven- 
ture, $42,000 in all. Is it possible that he and all 
other merchants like him do not know their own 
business and are all growing poorer, while they 
think, and their books of account and their bank 
deposits show, they have grown richer? Yet pro- 



Commerce 27 



tectionists tell us that they only are practical men 
and that free traders are visionary, academic men, 
knowing nothing of the practical business interests 
of the world. 

FALLACY OF THE NOTION THAT COUNTRIES TRADE 
WITH EACH OTHER 

You must have noticed that this protectionist 
thinks that this country has spent $42,000 by ex- 
porting $200,000 worth of American products and 
by importing $242,000 worth of foreign products. 
But we know that both the exporting and the im- 
porting were done by merchant A. and not by the 
United States. We say further to our protectionist 
friend that, as in return for $200,000 worth of 
American products, $242,000 worth of foreign 
products have been sent over here, we have gained 
$42,000 by the transaction. No, answers our pro- 
tectionist friend, we have to pay for this balance 
by sending $42,000 to Europe, and therefore this 
country is $42,000 poorer. The u balance of trade " 
is against us; we are importing more than we are 
exporting, and unless we stop it the country will be 
drained of its gold and we shall be ruined! 

AN APPARENT EXCESS OF IMPORTS OVER EXPORTS 
SHOWS ENRICHMENT, NOT DEPLETION 

Is it not clear that the American merchant is 
enriched by selling his cargo in Europe by the profit 



28 Free Trade vs. Protection 

he makes of $20,000, and that, having this profit 
to his credit in Europe, where, perhaps, he does not 
live and does not want it, and being desirous of get- 
ting this profit as well as his capital over here, 
where, perhaps, he does live and where he wants 
both capital and profit, he has two ways of accom- 
plishing this result? He may have both remitted to 
him, either in coin or by draft; or, being a merchant 
and knowing what goods he can import at a profit 
because he knows they are wanted by Americans, he 
decides to put both his profit of $20,000 and his 
principal of $200,000 into European goods or prod- 
ucts, that will sell here for more than their cost in 
Europe. On this he makes his second profit. 

Now the protectionist maintains that if he sends 
back his profit of $20,000 in coin along with his 
capital of $200,000 in coin, the country is enriched, 
but if he sends back the same amount in European 
goods or products the country is depleted and is 
poorer. Is it not obvious that in either case the 
country is enriched, or, to be exact, this merchant is 
enriched? An excess of imports over exports shows, 
therefore, enrichment, not depletion. 

COMMERCE BENEFITS THE INHABITANTS OF BOTH 
COUNTRIES 

On the first venture, the outward voyage, A. has 
supplied Europeans with something they wanted 
more than they did their money, which they ex- 



Commerce 29 



changed for it. They exchanged what they wanted 
less (their gold coin) for something they wanted 
more (the American products or articles they bought 
with their coin). A. exchanged what he wanted 
less (his American products) for something he 
wanted more (the Europeans' gold coin), and both 
gained by the exchange, as did the two boys when 
they swapped jack-knives. 

The same reasoning applies to A.'s home cargo. 
He exchanged it in the United States for what he 
then wanted more (American coin or money) and 
the American purchasers exchanged what they 
wanted less (their coin or money) for something 
they wanted more (A.'s European articles). And 
when A. did this with his homeward cargo he did 
it because he got more money than the cargo cost 
him. 

THIS MUTUAL BENEFIT IS IRRESPECTIVE OF THE 

RESIDENCE OF THE MERCHANT EFFECTING 

THE EXCHANGE 

In the above illustration we have supposed that 
the exportation and importation were both done by 
an American. Of course one American merchant 
might have carried out the exporting and another 
the importing. Or suppose that either or both were 
by Europeans, what difference does it make? And 
the American or Americans might be living abroad 



30 Free Trade vs. Protection 

or the European or Europeans might be living here 
while carrying on such commercial transactions; and, 
again, what difference does that make? Are not the 
inhabitants of both countries, who have obtained 
what they wanted more in exchange for something 
they wanted less, equally benefited? What power 
on earth could have forced these collections of the 
scattered inhabitants of different continents to make 
these exchanges unless they all received some benefit 
by it? 

When Talleyrand, a citizen of France driven out 
of England by war between England and France, 
fled to the United States and engaged in the busi- 
ness of exporting American cotton to Europe, were 
not the cotton planters of our Southern States who 
sold him the cotton and the cotton spinners of Eng- 
land who bought it of him both benefited? And 
what difference did it make where he lived? Of 
course he was entitled to his share of the gains for 
conducting these exchanges. 

FURTHER ILLUSTRATION OF THE BENEFITS OF 
COMMERCE 

Let us suppose that another merchant, B., resid- 
ing perhaps in Europe, undertakes a venture similar 
to A.'s by sending a cargo of European products of 
the same value to the United States, where he sells 
his cargo and puts the proceeds into a return cargo 



Commerce 31 



of American products which he sells in Europe. And 
let us suppose further that he realizes the same 
profits on both voyages that A. did. It is evident 
that the transfer of the principal and the profits of 
the American merchant is balanced by the transfer 
of the principal and the profits of the European 
merchant and there is no " balance of trade." Even 
before the return voyage of either, as well as after- 
wards, the sum of the imports was equal to the 
sum of the exports. Both merchants are richer by 
the profits they have made, and the inhabitants of 
both countries are richer, for certain inhabitants of 
the United States have got what they needed more 
in exchange for something they needed less and cer- 
tain inhabitants of Europe have done the same. 
There has been an economic gain all around and 
the merchants who managed these exchanges have 
received their reward for doing so. 

MORE ERRONEOUS PROTECTIONIST FIGURING 

We will suppose that A. undertakes another ven- 
ture of the same kind. Again he sends to Europe 
from the United States a cargo costing him 
$200,000. But the vessel founders in a gale on 
the outward voyage and everything is lost. He 
charges off on his books a loss of $200,000. Along 
comes the same benighted protectionist antiquary 
in economics, and, finding on the custom house rec- 



32 Free Trade vs. Protection 

ords that $200,000 of American products has been 
exported, with no imports to offset it, he comes to 
the conclusion that the country has made a gain 
of $200,000 in exports! 

If B. makes the same second experiment with the 
same result of losing the whole venture, the same 
sort of European protectionist, examining the cus- 
tom house records of the country the ship sailed 
from, would come to the same sapient conclusion 
as to the gain by B.'s country. But A. and B. know 
better. They know they have gone through unfor- 
tunate experiences and are poorer. Such is the 
danger that arises from the use of figures without 
knowing what stands behind them, especially when 
so used by protectionists who deride free traders as 
visionary and impractical. 

INCREASE OF EXPORTS IS NECESSARILY ATTENDED 
BY INCREASE OF IMPORTS 

Exports are often supposed to be of more im- 
portance than imports, and hence the attempts of 
protectionists to foster our exports and to repress 
imports (by taxing them through customs duties). 
This is due to the mistaken notion that commerce 
benefits one party and injures the other and that, by 
superior Yankee cunning, with the aid of " protec- 
tion," we can so arrange our commerce with the 
rest of the world that Americans will grow richer 



Commerce 33 



by it while all foreigners will grow poorer. It has 
been bolstered up by that pure fiction of untrained 
imagination, without regard to facts, that we are 
becoming poorer if we import more than we export 
and are growing richer if we export more than we 
import, measured in terms of money. Only, a few 
years ago even thinking men were alarmed if the 
results of a year's commerce showed what was 
called "a balance of trade against us" to be settled 
by the shipment of gold. If this alleged balance 
were settled by the shipment of pig iron or copper 
bars, no one would worry, but when settled by the 
shipment of gold it was thought that the country 
was growing poorer — oblivious of the fact that we 
sent abroad whatever there was more demand for 
there than here, and must expect to receive in re- 
turn whatever there was more demand for here than 
there — prices being the registers of these respective 
demands. This may be iron or copper or gold or 
other commodity constituting wealth. Gold, then, 
is a commodity, like other products of man's labor, 
and, like other commodities, it flows from any place 
where it is less needed to any place where it is more 
needed; and in return some other commodity flows 
back to replace it from the place where it is less 
needed to a place where it is more needed, to the 
benefit of both parties. Commerce is not a one- 
sided transaction, therefore, but a system of ex- 
change carried on with mutual benefit to all. 



34 Free Trade vs. Protection 

Exporting is as necesary as importing, importing is 
as necessary as exporting, one cannot exist without 
the other, as one increases, so does the other. 



CHAPTER III 

COMMERCE (Continued) 

THE SUM OF THE IMPORTS IS EQUAL TO THE SUM 
OF THE EXPORTS 

EVEN if at the end of a year there is apparently 
a balance one way or the other, what of it? 
There seems to be in popular belief some mysterious 
virtue attached to the period of time in which the 
earth revolves around the sun and the supposition 
that commercial intercourse between the inhabitants 
of different countries must come out square at the 
end of that period, known to us as a year. When 
we say that the sum of the imports is equal to the 
sum of the exports and that when one increases so 
does the other, what is meant is that this is a gen- 
eral statement that is true in the long run. They 
may not balance in any one day, one month, or one 
year, but in the long run, to vary the form of this 
statement, the sum of the exports is equal to the 
sum of the imports. Nor is this statement to be 
limited in its operation to commerce between the 
inhabitants of two countries only. If our exports 
to the inhabitants of country A. are five hundred 
millions in amount and our exports to country B. 

35 



36 Free Trade vs. Protection 

are also five hundred millions, and our imports from 
the inhabitants of country B. are one thousand mil- 
lions, it is evident that the sum of our imports is 
equal to the sum of our exports. How is the five 
hundred millions of exports to the inhabitants of 
country A. to be paid for? By exports by the in- 
habitants of country B. and of other countries in- 
debted to the inhabitants of country B. to the 
inhabitants of country A. ; so that in the end, by 
such a tripartite or multipartite settlement, the result 
is reached that the sum of the imports by the inhab- 
itants of all countries is equal to the sum of the 
exports of the inhabitants of all countries, and all 
accounts are settled to the benefit of all concerned. 
The following extract from a speech by Clay* 
shows that he perceived that the sum of all imports 
is equal to the sum of all exports: 

However the account may be made up, whatever 
may be the items of a trade, commodities, fishing, 
industry, marine, labor, the carrying trade, all of 
which I admit should be comprehended, there can 
be no doubt, I think, that the totality of the 
exchanges of all descriptions made by one nation 
with another, or against the totality of the exchanges 
of all other nations together, may be such as to pre- 
sent the state of an unfavorable balance with the one 
or with all. It is true that in the long run the meas- 
ures of these exchanges, that is, the totality in value 

* Annals of Congress, Eighteenth Congress, first session, p. 1891. 



Commerce 37 



of what is given and of what is received, must be 
equal to each other. [Italics are mine.] But great 
distress may be felt long before the counterpoise is 
effected. In the meantime there will be an export 
of the precious metals, to the deep injury of the 
internal trade, an export of public securities, a resort 
to credit, debt, mortgages. 

It is with the last part of this extract that free 
traders disagree. An export of the precious metals 
is no more feared by us than an export of metals 
not precious — or any other export. Webster called 
this fear of Clay's nonsense. 

Fault being found with him, he replied (Annals of 
Cong., 18th Cong., 1st Session, p. 2045) : Some days 
ago the balance of trade made its appearance in 
debate, and I must confess, sir, that I spoke of it, 
or rather spoke to it, somewhat freely and irrever- 
ently. I believe I used the hard names which have 
been imputed to me ; and I did it simply for the pur- 
pose of laying the specter and driving it back to its 
tomb. Certainly, sir, when I called the old notion on 
this subject nonsense, I did not suppose that I should 
offend anyone, unless the dead should happen to hear 
me. . . . Let us inquire, sir, what is meant by an 
unfavorable balance of trade, and what the argu- 
ment is, drawn from that source. By an unfavorable 
balance of trade, I understand is meant that state of 
things in which importation exceeds exportation. 
To apply it to our own case, if the value of the goods 



38 Free Trade vs. Protection 

imported exceed the value of those exported, then 
the balance of trade is said to be against us, inas- 
much as we have run in debt to the amount of this 
difference. Therefore it is said, if a nation continue 
long in a commerce like this, it must be rendered 
absolutely bankrupt. It is in the condition of a man 
who buys more than he sells, and how can such a 
traffic be maintained without ruin? Now, sir, the 
whole fallacy of this argument consists in supposing 
that whenever the value of imports exceeds that of 
exports, a debt is necessarily created to the extent of 
the difference: whereas ordinarily the import is no 
more than the result of the export augmented in 
value by the labor of transportation. The excess of 
imports over exports, in truth, usually shows the 
gains, not the losses, of trade; or in a country that 
not only buys and sells goods but employs ships in 
carrying goods also, it shows the profits of commerce 
and the earnings of navigation. 

England, richer every year, imports every year 
more than she exports. 

COMMERCE IS THE INSTRUMENTALITY WHEREBY 
ECONOMY RESULTS TO BOTH PARTIES EX- 
CHANGING COMMODITIES 

By means of commerce the inhabitants of all 
countries exchange what they produce the most eco- 
nomically for what the inhabitants of other countries 
produce the most economically. All effect a saving 



Commerce 39 



thereby and a portion of it goes to the merchants 
conducting the exchanges. As Emerson said of his 
fellow travelers on a long ocean voyage in a sailing 
vessel: " We exchanged experiences and all learned 
something," so, when commerce is free and unfet- 
tered, the inhabitants of all countries exchange their 
products and all gain something, just as when boys 
swap jackknives they all gain something. 

ANY TAX UPON THE EXCHANGE OF COMMODITIES IS 
A FETTER UPON COMMERCE 

The problem of the statesman is to limit this 
fetter, to make it as light as possible, i. e. t to impose 
a tax for revenue only. This is " free trade" in 
the proper sense of the term, as opposed to "pro- 
tection," which seeks to foster an industry that other- 
wise could not be carried on without loss, and, as the 
system has now been developed, to enable the ineffi- 
ciently managed mill or industry to continue divi- 
dends without improvement or increase in efficiency. 
If a tax or impost duty be actually paid — that is, if 
goods are imported and the duty paid — it is actual 
revenue received by the United States. But to serve 
its true purpose of starting and keeping alive an in- 
dustry that without it could not be carried on, the 
duty must be high enough to interfere materially 
with or to stop the importation of the protected 
article. If it stops all, or nearly all, importation, 



40 Free Trade vs. Protection 

the government receives no duty or but a little, while 
everyone pays nearly the whole of the duty just the 
same, in the enhanced price of the article due to the 
tariff; but instead of its going into the treasury of 
the United States it goes into the treasury of the 
protected trust or other producer. Protective taxes 
are therefore the tribute we pay our enterprising 
home producers to hire them to carry on some losing 
business they would not otherwise undertake, by thus 
taxing ourselves to pay them this tribute. 

At last our people have waked up to an appre- 
ciation of what this means and are inquiring how it 
benefits us all to tax all of ourselves to enable a 
comparatively few of ourselves to carry on some 
otherwise unprofitable business. Of course it bene- 
fits pickpockets to take other people's money and 
put it in their own pockets — but how does that 
benefit those whose pockets are picked? What if 
the pickpockets can get rich quicker by being pro- 
tected while they pick the pockets of all the people, 
how does that benefit all the people? 

PERSISTENCE OF THE NOTION THAT THERE IS MORE 
PROFIT IN EXPORTING THAN IN IMPORTING 

United States consuls are directed to study and 
report upon means to secure greater consumption 
of American products. Why is not our Government 
equally concerned in the study of means to increase 



Commerce 41 



imports? Evidently because of the lingering belief 
that the profit in commerce consists in exporting 
rather than in importing. But we know there can- 
not be exporting without an equivalent amount of 
importing, that both are profitable and are profitable 
to both parties. 

Prussia still makes special rates on her state- 
owned railroads for goods to be exported, on the 
ground that exporting should be encouraged. But 
as exporting depends on importing, the same favor 
should be extended to imports. 

INCLUDES DUTIES ON EXPORTS AND 
ALSO ON IMPORTS 

Section 8 of Article 1 of the Constitution of the 
United States gives power to the congress "to lay 
and collect taxes, duties, imposts, and excises." Ex- 
ports are not included, and, therefore, Congress has 
no power to lay and collect taxes on exports, for 
the power of the federal government is limited to 
the powers expressly granted or implicitly included 
as necessary to the exercise of powers expressly 
granted. To Americans generally, the word cus- 
toms suggests duties on imports, because we have 
laid a duty on imports only, ever since the adoption 
of our Constitution, as above explained. But duties 
on exports and duties on imports are equally cus- 
toms. The word was first applied to the duty on 



42 Free Trade vs. Protection 

exports paid to the king for permission to export. 
See i Blackstone's Commentaries, 313, where cus- 
toms are defined as " the duties, tolls, tribute or tar- 
iff, payable upon merchandise exported and im- 
ported." By the express words of the statute of 
25 Edw. 1, c. 7 (1297), the king promised to take 
no customs from merchants, without the common 
assent of the realm, these customs being the custom- 
ary duties on the exportation of wools, skins, and 
leather. 

That duties are not levied on exports any longer 
is probably due to the idea that exports are to be 
favored. If there were any real sense, any real 
basis, in " protection," duties should be levied on 
exports because they would be paid by the foreign 
consumer and there should be no duty on imports 
because they are paid by our own citizens, the very 
ones we want to protect. 

As another result of the notion that exports are 
to be fostered and imports discouraged, look at the 
maximum and minimum provision of our tariff, pro- 
viding for an advance of twenty-five per cent as a 
means of retaliation upon any country that "unduly 
discriminates" against the United States or its prod- 
ucts by "tariff rates or provisions, trade or other 
regulations, charges, exactions, or in any other man- 
ner, directly or indirectly, or imposes any export 
duty or prohibition upon the exportation of any 
article to the United States . . ." leaving the right 



Commerce 43 



to apply this provision in the discretion of the 
President of the United States. 

This is upon the doctrine that the benefits of for- 
eign trade consist in exports and that imports are to 
be discouraged except as to articles not produced 
here, or that will not compete with our products. 
It is thereby assumed that restricting imports can- 
not injure us, but may be used to injure exporters 
from other countries, as a penalty for tariff regula- 
tions of those other countries, supposed to be injuri- 
ous to our export trade. This is a basis for 
retaliation, but retaliation never benefits either the 
importer or the exporter, nor those for whom the 
importing and exporting are done. Although in 
effect nearly four years it has never been applied, 
and it should now be swept away. 

THE SUM OF ALL IMPORTS IS EQUAL TO THE SUM OF 
ALL EXPORTS 

At the risk of continued repetition of the same 
fact, I must reiterate this statement. If our exports 
are one dollar or one thousand million dollars in 
amount, our imports are the same. No country has 
exports without imports, no country has imports 
without exports. The sum of the one is the same 
as the sum of the other. If there are no imports 
in Patagonia, at the North Pole or the South Pole, 
it is because there are no exports there. The folly 



44 Free Trade vs. Protection 

of protectionism consists in the hallucination that 
we can foster and increase our exports and at the 
same time repress and diminish our imports, and 
then collect the difference in gold. The protection- 
ist wants to see large exports of American products. 
To be consistent, he should foster this policy by pay- 
ing a bonus or subsidy on all the gold sent into this 
country and at the same time he should put so high 
a duty on every other import as to keep out every 
import except gold. It would be the best get-rich- 
quick scheme yet devised ! 

FOREIGN GOLD, THE PRODUCT OF " CHEAP PAUPER 
LABOR/' SHOULD BE KEPT OUT OF THE COUN- 
TRY, ACCORDING TO PROTECTIONISM 

Upon second thought, however, this will not do, 
for, in accordance with the principles of protectioa- 
ism, we must admit that the gold of the world, out- 
side the United States, being produced by "cheap 
pauper labor," must not be allowed to come into 
this country to compete with our noble American 
gold, the product of American high-priced labor. 
Is it not evident that, in accordance with u the scien- 
tific doctrines" of "the American system" of pro- 
tection to everything American, all ignoble, base, 
foreign gold, the product of " cheap pauper labor," 
should be kept out of this country by a high duty, 
so that American capitalists and American laborers 



Commerce 45 



may be stimulated to produce our own gold? How 
does it happen that this " infant industry" has 
escaped the paternal care of protection? For these 
arguments are precisely those that have been ad- 
vanced ad nauseam and have secured adoption with 
regard to coal, iron, copper, salt, borax, nickel, etc. 
If the California miners of 1849 had only had wit 
enough to get Congress to protect their " infant in- 
dustry " by a duty of fifty per cent on imported gold, 
they could have charged every buyer of their gold 
fifty per cent more, and California would have been 
just so much the richer! This is the kind of 
reasoning protectionism gives us. 

It is not too late to grow rich by subsidizing gold 
produced in Alaska. Let the Alaskan miners wake 
up and prevail upon Congress to put an import duty 
of one hundred per cent on foreign gold, the prod- 
uct of "cheap pauper labor" in other lands, and 
straightway all the gold produced in Alaska and all 
the stock of gold in the United States will be doubled 
in value. What a rare opportunity for protection- 
ists to double the value of all our gold. Not only 
that, but if the Morgan-Guggenheim interests can 
slip through legislation that will give them good 
title to vast tracts of unexplored gold fields in Alaska 
as yet untouched, under the guise of protection to 
another u infant industry" and to "American high- 
priced labor," they can hire Indians and Canadians 
to pose as American laborers while getting out gold 



46 Free Trade vs. Protection 

for them, and another crop of American multi- 
millionaires will at once spring into existence, to 
prove to the world the beneficent success of " pro- 
tection, " when skillfully administered! This would 
be but to repeat what has actually been done with 
lumber, coal, iron ores, copper, nickel, borax, etc. 

PROTECTIONISM HAS ADOPTED THIS POLICY AND HAS 

APPLIED IT IN CASES OF OTHER NATURAL 

RESOURCES 

Do not laugh at the folly of this imaginary case, 
for it is just what protectionists have done in actual 
instances. A few years ago no borax was produced 
in this country. It was imported and the price was 
about three and a half cents a pound. Then borax 
was found in great deposits in our western deserts. 
These natural deposits were bought up and another 
great trust started on its career, and Congress was 
asked to help to " protect" a new " infant industry." 
This, of course, it gladly did, being well under pro- 
tectionist monopolistic control; and the result is 
that the price in this country has more than doubled, 
to the great benefit of the Borax Trust, and the 
excess beyond what is required by the home market, 
is sold abroad at less than half what it is sold for 
here, because, not being " protected" there, it has 
to be sold in competition with the borax produced 
there. As the result of this " protection," the 



Co 



mmerce 



47 



American supply is being rapidly used up, while 
every week in every American household using borax 
in its laundry, etc., the cost is double what it was 
before we knew we had borax in this country, and 
the American housewife can console herself by look- 
ing at the picture on each package of borax of a 
twenty-mule team hauling borax out of the American 
desert and by reflecting what a help it is to Ameri- 
can labor that a great many Mexican " greasers" 
are shoveling borax into wagons that mule teams 
are hauling out of the desert. To add to the ab- 
surdity and folly of this precious example of " pro- 
tection," let it be remembered that this borax trust 
is now a foreign trust, controlled abroad, and is 
exploiting American pockets and enriching its for- 
eign stockholders by making every American pay 
nearly double what he or she used to pay for borax, 
and at the same time is selling this American borax 
in Europe cheaper than in the United States. How 
does this benefit American consumers, American 
laborers, or the conservation of this new natural 
resource of our country? It is evident we are help- 
ing Europeans to cheaper borax out of the extra 
price charged to Americans, and by a duty that 
keeps out foreign borax we are hastening the ex- 
haustion of our own supply and helping foreign 
stockholders to dividends on their watered stock. 
Would it not be equally sensible to keep out foreign 
gold by a duty, in order to raise the price of Ameri- 



48 Free Trade vs. Protection 

can gold produced by American labor — and then 
to sell the surplus of this American gold, not needed 
in this country, in Europe, cheaper than in the 
United States? 

THE " PROTECTION OF INFANT INDUSTRIES" MEANS 

THE HASTENED EXHAUSTION OF OUR 

NATURAL RESOURCES 

We have gone through the same experience with 
copper, nickel, chromium, and other natural re- 
sources. Every time a new natural resource has 
been found in the United States, a new " infant 
industry" under the fostering care of protection 
has developed a new set of millionaire holders of 
its capitalized watered stock, the price of the article 
has been raised by a duty high enough to keep out 
the same article produced more cheaply in some 
other part of the world, and we have gone to work 
to use up as fast as we could (in part by selling the 
article cheaper abroad than at home) our new nat- 
ural resource, instead of conserving it or protecting 
it in the proper sense of the word, for future use, 
after the cheaper supply elsewhere is exhausted. 
Under the hallucination, miscalled protection, that 
has bewitched the American people, all American 
consumers have had to pay more for the article, 
and a new crop of millionaires has illustrated the 
process of the enrichment of the few at the expense 



Commerce 49 



of the many through the special privilege granted 
them by a complaisant Congress consisting of Sena- 
tors and Representatives whose elections are " seen 
to " by the protected interests benefited by their leg- 
islation. The American people are getting tired of 
such a vicious system. 

THE DEVELOPMENT OF NEWLY DISCOVERED NAT- 
URAL RESOURCES MEANS NOW THE EXPLOI- 
TATION OF OUR PEOPLE 

The result is that the finding of another natural 
resource in this country is a cause for regret. It 
has been stated lately that vast deposits of potash 
salts have been found in the United States. Let 
consumers beware! For, unless they watch their 
Congressmen and bring an educated public opinion 
to bear on them to restrain them, a duty or an in- 
creased duty will be put upon imported potash salts 
and it will soon be found that the control of the 
newly discovered American potash deposits has 
passed into the hands of a new trust with millions 
of capitalized stock consisting largely of "water," 
on which dividends will be paid to the fortunate 
stockholders, all through the kind "protection" 
furnished by the tariff, and every American user of 
potash will have to pay twice as much for it as he 
paid before this plentiful supply was found in this 
country. But then, says the protectionist, we shall 



5<3 Free Trade vs. Protection 

have a new industry in this country and we shall no 
longer be dependent upon Germany for our potash. 
Does this do the American consumer any good, or 
make him feel any better, when he gets only half 
as much potash for his money? And further, by 
thus lessening the imports from Germany, we also 
lessen the exports from the United States to 
Germany. 

ASBESTOS 

Since writing the above the following has ap- 
peared in the newspapers: 

Liano, Tex., Aug. 9, 1912. — Big Asbestos De- 
posit Found ! Outcrop of Mineral in Texas Known 
to Cover Sixty Acres! It is claimed by F. S. 
Ingram of Chicago, vice president of the National 
Asbestos Refining Company of that city, that the 
deposit of asbestos recently discovered near Liano, 
and which he and his associates have acquired, is 
the largest of that mineral substance yet discovered 
in any part of the world. He says that the outcrop 
of the fibrous mineral is known to cover about sixty 
acres. The deposit is 500 feet wide and more than 
1700 feet long. Its depth is not known. The com- 
pany is preparing to install a plant for handling the 
production on a large scale. 

Let the country take warning! We may soon 
expect to see an application to Congress to raise the 
present unnecessary duty on asbestos, to foster an- 



Commerce 51 



other " infant industry," that of digging asbestos 
out of the ground. If granted — as, of course, it 
will be (if protectionists are in control) unless pub- 
lic opinion becomes too pronounced against it — 
the price of asbestos will soon be doubled to Ameri- 
cans (but not to Europeans) and all American users 
of asbestos will be " protected " out of twice as much 
money for the same amount of asbestos and another 
set of millionaires will spring up through another 
grant of special privilege. We shall be told what a 
fine thing it is that we are no longer dependent on 
Europe for asbestos, and that, in some mysterious 
way, it raises the wages of Americans employed in 
digging and shoveling the asbestos out of the 
ground, and that these men are being protected 
against the cheap pauper labor of Europe ! although 
there will be no more paid to these diggers and 
shovelers than was paid to other diggers and shovel- 
ers before this deposit was found. 

DIAMONDS 

Were a volcano to belch forth diamonds some- 
where in the United States, a "Diamond Trust" 
would be formed, would acquire title, would prevail 
upon Congress to raise the duty on diamonds, and 
up would go the price of diamonds. The public 
would be consoled by the assurance that this new 
beneficent trust was benefiting us all by " diversifying 



52 Free Trade vs. Protection 

our industries " and was benefiting American labor 
by paying high wages to American diamond cutters 
in the place of the low wages paid to the cheap 
pauper labor of Dutch diamond cutters. The stock- 
holders, too, would be consoled, very much consoled, 
every time they would receive their dividends, largely 
increased by dividends on the water in their stock 
representing the special privilege given to them for 
nothing by Congress (except, perhaps, a voluntary 
contribution to campaign funds, it may be of both 
political parties) to make every American pay twice 
as much for diamonds. Should the supply belched 
forth increase, so that all the diamonds could not 
be sold in the United States, this " Diamond Trust," 
with the usual beneficent spirit shown by trusts, could 
export the surplus diamonds and sell them in Europe 
and elsewhere below the price in the United States. 
What a blessing to the country this would be ! 

COMMERCE IS A GREAT PEACE MEASURE, BECAUSE IT 
LEADS TO INTERDEPENDENCE 

From the point of view of the statesman, the inter- 
dependence of mankind is desirable and should be 
cultivated, as leading to peace on earth and good-will 
to man. Barbarous, savage countries know nothing 
of the restraining influence of mutual interests and 
interdependence. Free trade is, therefore, a great 
peace measure, and it is surprising that the advocates 



Commerce 53 



of peace between nations and the friends of disarm- 
ament have not relied more upon this line of argu- 
ment, and have not insisted upon free trade as the 
great promoter of the peace of mankind. Nations 
that are closely related through commercial relations 
will not lightly go to war with each other. The 
greater the volume of imports and exports between 
England and the United States, the less is the like- 
lihood that they will cut each other's throats; be- 
cause, while so doing, they will cut their own. Estab- 
lish free trade (meaning tariffs for revenue only) 
between all European nations and the^ would be no 
more wars. It is not well for any country to be self- 
contained and economically independent of all other 
countries, nations, or states, whether in a union or 
out of it Nothing would be gained if each state in 
our Union were economically independent of every 
other state. On the contrary, our interdependence 
is a bond of union, and so is the increasing interde- 
pendence of all mankind. 

FUTILE TO ATTEMPT TO LIMIT THE BENEFITS OF 
COMMERCE TO ONE SIDE ONLY 

Two hundred years or more ago England under- 
took to legislate so that the profit in trade with her 
American colonies should all go to the merchants 
and producers living in England engaged in such 
trade, and that the loss (assuming there was a profit 



54 Free Trade vs. Protection 

on one side and a loss on the other side, as was then 
thought possible) should all fall upon the English- 
men, as they then were, living on this side of the 
ocean. This was as futile as would be an attempt 
now in the case of the people in London and Liver- 
pool, trading with each other, to limit the profits to 
those living in London and to throw the losses (if 
there were any) upon those living in Liverpool. The 
benefits of commerce are mutual or commerce ceases, 
and it makes no difference whether that commerce 
be parochial, national, or cosmopolitan. Trade 
knows no country and no flag. 

THE UNITED STATES AN EXAMPLE OF THE BENEFITS 
OF ABSOLUTE FREE TRADE 

The best practical example of the successful work- 
ing of absolute free trade is to be found here at 
home. Remember that it was the actual bad results 
of protection by the colonies, just become states, that 
led the founders of our Constitution, as practical 
men, not as visionary theorists, to forbid protection 
by any state. Had they foreseen what was to hap- 
pen here under the false theory of protection as 
applied to a nation, they would have been wise if 
they had forbidden protection by the nation. Pro- 
fessor Sumner says :* 

* Lectures on the History of Protection in the United States, 
p. 8. 



Commerce 55 



If it be asserted that States which pursue different 
industries cannot afford to trade freely with one 
another, here we have them — New York and Penn- 
sylvania; Massachusetts and Minnesota; Maine and 
Louisiana. If it be asserted that States with like 
industries cannot afford to trade freely with one 
another, here we have them — Indiana and Illinois ; 
Iowa and Minnesota; Massachusetts and Rhode 
Island ; Alabama and Mississippi. If it be said that 
small States cannot afford to trade freely with great 
empires, here are New York and Connecticut; 
Pennsylvania and Delaware. Why do not the great 
States suck the life out of the small ones? If it be 
said that new States, with little capital and in the first 
stages of culture, cannot afford to exchange freely 
with old States having large capital and advanced 
social organization, here are New York and Oregon, 
Massachusetts and Idaho. How can any territories 
ever grow into States under the pressure? If it be 
said that a State which relies on one industry cannot 
afford to exchange freely with one which has a 
diversified industry, here are Pennsylvania and Colo- 
rado; California and Nevada; any of the cotton 
States and any of the Northeastern States. No such 
strong illustrations are furnished by any States in 
the world which are sovereign and independent of 
each other. The Constitution of the Union enforces 
absolute freedom of exchange and each State pays 
its own taxes and supports its own government. The 
traveler rarely knows when he passes from one State 
to another. As to what he buys or where he buys, 



56 Free Trade vs. Protection 

what he sells or where he sells, it would be consid- 
ered an unwarrantable impertinence for any public 
officer to inquire. Yet no man has ever been known, 
so far as we are aware, to complain of this as a 
hardship, or as imposing a loss upon him, and no 
such complaint has arisen from any State as a State 
nor has anyone heard that here was an actual loss 
which must be endured for the sake of the great 
benefits which come from Union. On the contrary, 
it is universally and tacitly agreed that this is one 
of the great benefits of the Union. 



CHAPTER IV 

COMMERCE (Continued) 

FATAL ERROR OF THE REPUBLICAN PARTY IN TAXING 

IMPORTS FROM CANADA AND REPELLING HER 

JOINING THE AMERICAN UNION 

THERE was a time, about fifty years ago, when, 
by a wise policy of conciliation and reciprocity, 
Canada could have been brought into the Union. It 
is too late now. Centuries hence, at the bar of his- 
tory, when the story of the rise, career, decay, fall, 
and extinction of the Republican Party will be told 
by some impartial historian, the Gibbon of his time, 
it will be told that the one great blunder, the one 
great failure of that party was the adoption of a 
policy of repression of commercial intercourse that 
alienated Canadians and drove them from a union 
that would have resulted in the erection of fifty 
more imperial states of the great American Re- 
public, joined with us in a common career. 

COMMERCE IS THE MEDIUM THROUGH WHICH ECON- 
OMY IN PRODUCTION IS MADE EFFECTUAL 

Every country specializes according to its natural 
resources, development, and circumstances. Germany 
excels in the manufacture of chemicals; England in 

57 



58 Free Trade vs. Protection 

textile goods; France in fine dress goods, silks, vel- 
vets., etc.; the United States in boots, shoes, iron, 
steel, and special machines. The inhabitants of each 
state and country profit, so far as the excessive re- 
strictions of their respective tariffs allow, by exchang- 
ing their respective specialties through the medium 
of commerce. What is to the advantage of the par- 
ties to these exchanges is to the advantage of all. 
All gain more by such exchange than if those in each 
country undertook, uneconomically, the particular 
special industry in which the inhabitants of some 
other country excel, and in which, through some 
limitation of nature, they are deficient. When we 
say that a country excels in some particular industry, 
we mean that the inhabitants of that country can 
carry on there more economically than can be done 
elsewhere that particular industry, with less cost for 
the result attained. By exchanging a commodity 
produced with less labor for another commodity 
produced also elsewhere with less labor, as before, 
there is a saving for both parties. 

Commerce is the medium through which this 
mutual economy is made effective. It makes no 
difference whether this exchange takes place between 
inhabitants of different villages, towns, cities, states 
in a union, states not united, or continents. This the 
protectionist cannot see. His mental make-up is such 
that his horizon is limited, and he cannot look beyond 
his own provincial limits. Even if he can see far 



Commerce 59 



enough to apply these principles to cases arising 
within his own country, he cannot conceive of their 
applying to intercourse with the inhabitants of for- 
eign countries. Many cannot even see beyond the 
limits of their own home, and will tell you that you 
must patronize the stores of your own particular 
town or city, though they do not have for sale 
exactly what you want and charge more for what 
they have than is charged in some nearby town or 
city or state. In the same narrow way many persons 
maintain that when Italians return to Italy, carrying 
with them the money they have earned here, this 
country suffers a loss, forgetting that these Italians 
leave behind them the results of their labor, to our 
enrichment, else we should not have paid them our 
money to work for us. 

ILLUSTRATION OF THE ECONOMY RESULTING FROM 
COMMERCE 

The Chinese use enormous quantities of cheap, 
coarse cotton cloth for clothing. It is produced in 
China, slowly and uneconomically, on hand looms. 
Their country is fitted by nature for the raising and 
curing of tea, and the Chinese have become most 
skillful in this industry, through centuries of experi- 
ence. In England and in the United States some of 
us have become skillful in making machinery and in 
making cotton cloth with it. The result is that in 



60 Free Trade vs. Protection 

spite of the enormous difference in wages in the two 
countries it costs less to make this cloth here and 
in England than it does to make it in China, even 
though they are now using our machinery. It is 
reckoned that in England or in the United States this 
coarse cloth can be made with one-thirtieth of the 
labor required to make it in China ; so that, although 
the wages in making this cloth are higher here and 
in England than in China, the cloth costs less per 
yard than when made in China. It is a benefit to the 
inhabitants of both countries to exchange our cotton 
cloth for their tea, or, as the protectionist would put 
it, to sell our cloth to the Chinese and to buy their 
tea. It is evident that both parties benefit by this 
exchange or sale and purchase. The Chinese get 
their cloth for less than it would cost them to make 
it, and the Americans and Englishmen get their tea 
for less than it would cost them to raise and cure it 
themselves. Unless both parties profited by the 
exchange they would not make it. 

THE RESULTING ECONOMY MAY INCLUDE THIRD 
PARTIES 

The inhabitants of more than two countries, even 
of more than three, may be involved in the exchange 
of commodities through commerce. It may be that 
the commodity or commodities wanted by the inhab- 
itants of a country whose merchants are exporting 



Commerce 61 



other commodities (including gold) cannot be found 
in the country whose merchants are importing or 
receiving the latter commodities (including gold). 
In that case the latter may buy the desired commod- 
ity or commodities in some other country or conti- 
nent, in offset of their debt to the inhabitants of the 
first named country. These complexities of inter- 
national commerce receive no adequate considera- 
tion from protectionists when they say that u One 
country sending its gold to pay its debts to another 
country is becoming poorer." But, as we have 
already seen, countries do not engage in commerce, 
and if gold goes out of a country, exported by certain 
bankers or merchants (not by any country) , it is 
replaced by imports. If, instead of gold, the exported 
article be silver, copper, lead, or iron, the same holds 
true, and in all cases the sum of the imports is equal 
to the sum of the exports. All that is needed is that 
legislators of all nations keep their hands off and let 
commerce take care of itself, except as it may be 
necessary to interfere because of the admitted neces- 
sity of raising revenue at the custom houses to pay 
the expenses of government. Protection in any guise 
is an interference, or, as Sumner calls it, a nuisance. 
It is a curse, because it is a breeder of fraud and 
corruption whenever it steps beyond the necessity of 
a tariff for revenue. 

When Colbert, the great Minister of Louis XIV 
of France, asked French merchants what he could 



62 Free Trade vs. Protection 

do for them, they made him a wise answer when they 
said, " Let us alone." They knew their own business 
better than he did. 

ILLUSTRATION OF THE BENEFIT OF FREE EXCHANGE 

In Mill's Principles of Political Economy we find 
the following illustration : 

If, while the cloth produced with one hundred 
days' labor in Poland was produced with one hun- 
dred and fifty days' labor in England, the corn 
which was produced in Poland with one hundred 
days' labor, could not be produced in England with 
less than two hundred days' labor, an adequate 
motive to exchange would immediately arise. With 
a quantity of cloth which England produced with 
one hundred and fifty days' labor, she would be able 
to purchase as much corn in Poland as was there 
produced with one hundred days' labor; but the 
quantity which was there produced with one hun- 
dred days' labor would be as great as the quantity 
produced in England with two hundred days' labor. 
By importing corn (meaning wheat), therefore, 
from Poland, and paying for it with cloth, England 
would obtain for one hundred and fifty days' labor 
what would otherwise cost her two hundred, being 
a saving of fifty days' labor on each repetition of 
the transaction, and not merely a saving to England, 
but a saving absolutely ; for it is not obtained at the 
expense of Poland, who, with corn that costs her 



Commerce 63 



one hundred days' labor has purchased cloth which, 
if produced at home, would have cost her the same. 
Poland, therefore, on this supposition, loses nothing ; 
but also she derives no advantage from the trade, 
the imported cloth costing her as much as if it were 
made at home. To enable Poland to gain anything 
by the interchange, something must be abated from 
the gain of England; the corn produced in Poland 
by one hundred days' labor must be able to purchase 
from England more cloth than Poland could pro- 
duce by that amount of labor ; more, therefore, than 
England could produce by one hundred and fifty 
days' labor, England thus obtaining the corn which 
would have cost her two hundred days' labor at a 
cost exceeding one hundred and fifty, though short 
of two hundred. England, therefore, no longer gains 
the whole of the labor which is saved to the two 
jointly by trading with one another.* 

Little do protectionist tariff tinkers foresee the 
results that may follow their mischievous interfer- 
ence with the natural laws of exchange. 

WHAT ABSOLUTE FREEDOM OF TRADE CAN DO 

Consider for a moment a vast city like London, 
New York or Chicago, each with its many millions, 

*As countries do not trade with each other, but their in- 
habitants do, the names of the countries, " England " and 
" Poland," used in the above illustration must be understood 
to stand for their respective inhabitants who are supposed to 
be trading with each other. 



64 Free Trade vs. Protection 

far exceeding the population of other States. These 
teeming millions would all die in a few days if pro- 
visions did not flow into them. Imagination cannot 
conceive the multiplicity and the variety of their 
wants, that unless supplied tomorrow will lead to 
famine or riot, pillage and murder. And yet at 
night all is still and quiet, and no one feels uneasy 
because of these possibilities the next day. What 
can possibly supply all these vital wants? What 
mysterious force is there that, without any law of 
man, can bring into each and every one of these 
and other cities just the precise quantity of every- 
thing needed for the next day, neither too little nor 
too much, but just enough? What is the ingenious 
and secret power that can automatically do it so well 
that we do not think of it, but trust thoughtlessly 
and implicitly in it? It is the principle of perfect 
freedom of exchange, the law of demand and 
supply. No theory of protection is called for. If 
we have such perfect faith in this principle as thus 
applied to the private concerns of mankind, why 
should we not extend it to international transactions, 
and leave them to the operation of the same natural 
laws ? The mayors and city councils do not, cannot, 
undertake to regulate these matters, they do not 
undertake to say where the citizens shall trade, nor 
what they shall buy or sell, nor to whom or from 
whom, nor to fear they will buy or sell too much or 
in the wrong market. Then, why should it be 
thought necessary for the national government, 
because, in order to raise a revenue for the State's 



Commerce 65 



expenses, it must collect a certain tax or import 
duties at its customs houses, to interfere further 
in the affairs of its citizens, by undertaking what is 
called protection over the country's external 
commerce ? * 

THE BUGABOO CALLED " DUMPING" 

Protectionists tell us that our home markets must 
not be " flooded" with the cheaper, and often the 
better, made foreign products of " pauper labor," 
whatever that opprobrious term may mean, and that 
this country must not be made " the dumping-ground 
of Europe." 

If foreign products are " dumped" here, are not 
our products " dumped" in Europe, in exchange for 
them? Do not our people buy " dumped" articles 
because they want them and because they get their 
money's worth? How much " dumping" would be 
done if our people did not buy what is " dumped" 
here? Are such products " dumped" in Patagonia 
or the Desert of Sahara? Are they not always 
"dumped" in some wealthy country that has some- 
thing to "dump" in exchange? Do not Americans 
also " dump " many of their products in foreign coun- 
tries? And do they not also "dump" them only in 
wealthy countries, the inhabitants of which have 
something to " dump " here in return, either gold or 
other products that they want less than they want 
♦Bastiat, Sophisms of Protection, p. 122. 



66 Free Trade vs. Protection 

the American " dumped " product? Certainly no 
one supposes that foreigners " dump n goods here or 
that Americans "dump" goods abroad for nothing, 
as ashes and rubbish of all kinds are dumped to get 
rid of them because they have no value. It is true 
that American commodities "dumped" abroad are 
sold for less there than the same are sold for here, 
but that is because of the difference in the markets. 
American goods " dumped" abroad have to compete 
with the markets of the world by coming down to 
their prices, but it is not so easy for foreigners to 
" dump " their products in the United States, because 
of our high tariff that cuts off this competition and 
makes every American consumer pay more for the 
American-made article than he can buy it for abroad, 
without any resulting benefit to the income of our 
government. It must also be remembered that it is 
more than the surplus of their commodities uncon- 
sumed in the American market that is sold abroad 
at lower prices than they are sold for here. There 
are many manufacturers now in the United States 
who sell their entire product in Europe — that is, 
they " dump " their entire product in Europe. Is the 
misuse of a good enough term in an opprobrious 
and misleading sense to continue indefinitely to blind 
us to the real nature of the transaction? In this 
absurd fear of " invasion by foreign products," of 
"dumping" by which our home markets will be 
"flooded with foreign goods," is there not a con- 



Commerce 67 



fession that a protective tariff is an obstacle to com- 
merce, a senseless Chinese wall, a creator of high 
prices and a promoter of scarcity, whereas free trade 
(meaning always a tariff for revenue only) would 
bring that cheapness that all consumers want? 

No commodities are " dumped" where they are 
not wanted. If Americans or Europeans "dump" 
American products abroad it is because there is a 
demand for them, and the goods or the gold taken 
in exchange for them are "dumped" here because 
there is a demand for them here. In popular esti- 
mation goods from abroad "dumped" here are sup- 
posed to injure us, but American goods "dumped" 
abroad are supposed to benefit us. This is a relic of 
the old notion, so hard to overcome, that exports 
are of greater importance than imports, and will 
enrich a country, while imports will injure a country; 
and this is supposed to be peculiarly true of gold. 
This erroneous idea is due to ignorance or failure to 
grasp the meaning of the fact that there cannot be 
exports without imports, and that the sum of all 
imports is equal to the sum of all exports. 

THE MERCANTILE THEORY 

It was natural enough for people to think that 
money (gold and silver) has a greater intrinsic value 
than other forms of wealth when the science of eco- 
nomics was in its infancy. Even now those who 



68 Free Trade vs. Protection 

know little or nothing of economics take it for 
granted. This outworn and now discredited and 
abandoned idea was at the bottom of the mercantile 
theory, so called. Colbert was the chief exponent 
of this system, according to which every country is 
rich in proportion to the amount of gold (and silver) 
it has. Consequently every precaution must be taken 
to prevent what coin a country has from going out of 
the country, and every means must be taken to induce 
more gold to come in. If there is u an adverse bal- 
ance of trade M against a country — that is, an appar- 
ent difference between the imports and exports of the 
inhabitants of that country that must be settled 
by the payment of coin — then, according to the mer- 
cantile theory, that country is becoming poorer. On 
the other hand, if there is "a favorable balance of 
trade" — that is, an apparent difference between the 
imports and exports of the inhabitants of that coun- 
try that must be settled by the receipt of coin — then 
that country is becoming richer. It was thought to 
be essential to every country's w r elfare, in accordance 
with this theory, to hoard what gold was in it and 
to secure more gold from outsiders. It was the 
miser's theory applied to commerce, and was the 
practice of all nations until the theory w r as demol- 
ished by Adam Smith in The JFe tilth of Nations. 
It has been abandoned by all political economists, 
but it has left an apparently indelible impress on 



Commerce 69 

careless and ignorant thinkers and on protectionists. 
Many protectionist newspapers and M the man on the 
street n still talk about u an adverse balance of 
trade," and present startling statistics to show we 
are becoming poorer because we are importing more 
than we are exporting; the deficiency must be paid in 
coin, the country is being drained of its wealth, u the 
balance of trade is against us, n etc., etc. If everyone 
would but remember, on seeing these scarehead an- 
nouncements, that the sum of all imports is equal to 
the sum of all exports, he will be saved unnecessary 
alarm. Great Britain imports every year more than 
she exports — or, to be exact, her inhabitants do — 
yet, apparently, she is richer and richer from year 
to year, and so are her inhabitants. 

ILLUSTRATION OF THE FALSITY OF THE MERCANTILE 
THEORY 

When gold was discovered in California and lucky 
miners accumulated stores of it, they sent it out of 
California in exchange for what they wanted more 
than gold — that is, corn, wheat, hardware, tools, 
machinery, etc. The inhabitants of the rest of the 
country exchanged what they had in excess and 
wanted to sell — that is, corn, wheat, hardware, 
tools, machinery, etc. — for what they wanted more 
— that is, gold — and both parties were enriched by 



JO Free Trade vs. Protection 

the exchange or they would not have made it. But, 
according to the mercantile theory, California was 
becoming poorer all the time that her inhabitants 
were parting with their gold. According to this 
theory, California was richest before any gold was 
discovered there. 

ILLUSTRATION OF THE PERSISTENCE OF BELIEF IN 
THIS THEORY 

Even a well-educated member of Congress from 
Massachusetts, Augustus P. Gardner, a son-in-law 
of Senator Lodge, certainly a man with every oppor- 
tunity for knowing better, still talks about the bal- 
ance of trade ! In a speech made by him in the 
House, February 14, 191 1, after quoting from a 
speech by Senator Morrill, delivered January 7, 
1885, in which the Senator said " the balance against 
us in specie in a single year was $30,000,000," Rep- 
resentative Gardner said, " Instead of being millions 
to the bad in our business relations with Canada, as 
was the case when the Elgin treaty was terminated 
in 1866, last year we were no less than $1 18,000,000 
to the good." 

It is impossible to treat with respect such childish 
talk in an age when every educated man can only 
be said to be culpably ignorant or wilfully perverse 
who does not know better than to present his belief 
in the mercantile theory. 



Commerce ji 



FURTHER ILLUSTRATION OF THE PERSISTENCE OF 
THIS FALLACY 

Every once in a while we meet a statement going 
the rounds of the newspapers that Lincoln said, " I 
don't know much about the tariff, but I know this 
much: when we buy manufactured goods abroad we 
get the goods and the foreigners get the money. 
When we buy the manufactured goods at home we 
get the goods and the money, too." 

I have a better opinion of Lincoln than to believe 
he ever made such a foolish statement until proof 
he did so is shown me. When and where did he say 
it? What was the rest of what he said? 

This fine sample of bad reasoning assumes that 
we pay for imported goods in money and that it is a 
bad thing to have the money go out of the country, 
whereas it is economical, if the goods can be manu- 
factured more economicallly abroad than here, to 
import them. Doubtless cucumbers, melons, and 
grapes could be raised under glass at the North 
Pole, but it would be more economical for anyone 
living there to import them from the United States 
or elsewhere, even if he did have to send his money 
out to pay for them, for it would cost him more than 
the money he would send out, to raise them at his 
home. 



CHAPTER V 

FREE TRADE 
FREE TRADE IS PRACTICAL 

PROTECTIONISTS call themselves " practical 
* men" and brand free traders as u theorists." 
If the absolute free trade existing in the United 
States from the Atlantic to the Pacific, from the 
great lakes to the Gulf of Mexico, is a theory — if 
the supremacy of England in commerce through free 
trade is a theory — what do protectionists call a 
fact? 

Absolute free trade is the natural condition of 
mankind everywhere. It is no theory, but an actual 
fact until theorists came along and introduced an 
artificial system miscalled protection. Professor 
Sumner calls absolute free trade u a mode of lib- 
erty." It has existed throughout the United States 
ever since 1789, and no one realizes it until he stops 
and thinks about it, just as we naturally breathe with- 
out realizing it until something calls our attention to 
it. Free trade, like liberty, is absence of restraint or 
oppression. Just as the Frenchman spoke prose all 
his lifetime and never knew it until he was told, so 
we, everywhere in the United States, buy and sell 

72 



Free Trade 73 



wherever we please within our great country. We 
have absolute free trade and no one realizes it until 
his attention is called to it. 

FREE TRADE IS AN ACTUAL FACT 

It is an actual fact and so natural that we take it 
for granted and suppose it always has been so. The 
average American is surprised to find that the neces- 
sity for it was one of the causes leading to the 
formation and adoption of our Constitution, for 
until then our colonies and States protected them- 
selves against each other, each colony or State pass- 
ing such protective laws as it chose. Pennsylvania 
and Massachusetts tried to benefit their citizens by a 
tax on products brought in from other States. New 
York sought "protection" for its farmers through 
a tax on produce from Connecticut. An interesting 
chapter could be written on the vagaries of the 
methods resorted to by the different colonies to carry 
on trade with each other in such a way, through pro- 
tective legislation, that the merchants and traders 
of each colony or State should make all they could 
out of their neighbors and that those neighbors 
should make nothing out of them — quite in the most 
approved style of protectionism. The adoption of 
the Constitution put an end to all these schemes, and 
hitherto undreamt of prosperity furnished proof of 
the falsity of the position now taken by those 



74 Free Trade vs. Protection 

theorists called protectionists that free trade is a 
theory that can only be brought about gradually. 

It would be as reasonable to apply the word 
" theory " to the Protestant Reformation, or to law 
reform, or to anti-slavery, or to the separation of 
church and state, or to popular rights or to any 
other campaign in the great struggle which we call 
liberty and progress, as to apply it to free trade.* 

To call free trade a theory is a part of the general 
misconception or misrepresentation of the real mean- 
ing of words and things that forms so prominent a 
part in the mental processes of protectionists. Eng- 
land growing richer and richer year after year under 
free trade, although all the time importing more 
than she exports (or, to speak more accurately, than 
her inhabitants import and export) is a theory, 
according to protectionists. I prefer to call it fact 
and to brand as theorists those who deny it. 

FREEDOM THE ONLY SAFE WAY 

Emerson said: 

The basis of political economy is non-interference. 
The only safe rule is to be found in self-adjustment 
of demand and supply. Do not legislate. Meddle, 
and you snap the sinews with your sumptuary laws ; 
give no bounties ; make equal laws ; secure life and 
property, and you need give no alms. 
*" Protectionism" by Prof. W. G. Sumner, p. n. 



Free Trade 75 



We find that the exports from free trade England 
(meaning that England has a tariff for revenue 
only) are six times what they are from the United 
States. Reduce our tariff to reasonable limits and 
we shall become a great exporting and importing 
country, for we have now so developed our indus- 
tries that we can produce at low cost were it not for 
the expenses entailed upon us through protection. 
Freedom from slavery, freedom of church from 
state, of state from church, freedom of speech, free- 
dom of the press, and other ordered forms of regu- 
lated freedom and liberty were all theories at one 
time. Doubtless a Turk would tell you they are all 
theories now; beautiful, iridescent dreams incapable 
of fulfillment. We prefer to call them facts. 

FREE TRADE HAS TWO MEANINGS 

England is generally looked upon, even by protec- 
tionists, as a free trade country. They do not mean 
by this that she has no custom houses and levies no 
duties on imports. They mean that she has a tariff 
for revenue only. Then, why do they not use the 
term " free trade " in the same meaning in all their 
arguments? Instead of doing so they perversely 
turn about and say that " free trade " means the 
abolition of all custom-house duties. Is this fair? 
It is to be hoped that in course of time protectionists 
will cease their misrepresentations, just as they have 



76 Free Trade vs. Protection 

ceased their senseless talk of thirty years ago about 
" British gold" sent over here to be lavishly, and, of 
course, corruptly, used to break down protection; of 
assessments made by the Cobden Club to furnish 
funds for that purpose; of professors in our colleges 
under British pay to cajole Americans into accept- 
ance of free trade. It is well to refresh our mem- 
ories occasionally with recollections of these aban- 
doned absurdities of protectionists, that we may 
point to them as reasons for disregarding the new 
absurdities they present to us from time to time. 
Already the nonsensical idea that "the foreigner 
pays the tax" has passed away and is so well nigh 
forgotten that many of my younger readers will 
probably admit that they have never heard of it. It 
will be followed into forgetfulness by the absurd 
idea, so pleasing to Mr. Taft and others who should 
know better, that the difference in the cost of pro- 
duction here and abroad is the measure of protection 
required by the American workman. The cost of 
production under what circumstances? Of the best- 
equipped factory or shop, or of the worst-equipped 
one? Of the one managed with the highest effi- 
ciency, or of the one managed with the lowest, or 
none at all? Of the industry carried on by a trust 
with millions of watered stock, or of that carried on 
with payment of dividends only upon actual capital? 
What is the measure of protection required under 
this test in those many cases in which the cost per 



Free Trade yj 



unit is less in the United States than abroad, even 
though the daily rate of wages is higher? The test 
proposed by these impractical men, the theorists, is 
an impossible one and has been thoroughly riddled 
by the arguments of free traders, especially by those 
of Representative Redfield, of Brooklyn, N. Y., in 
his speeches in Congres and on the stump. 

11 THE COST OF PRODUCTION HERE AND ABROAD " 

Which cost of production? Which cost here? 
Which cost abroad? Which two costs shall be com- 
pared? The cost to the producer who is the most 
favorably situated? Or to the one least favorably 
situated? Or the average cost of production? If 
so, how is it possible to ascertain it? How is it to 
be determined? Take, for instance, the cost of 
wool. In that part of the country where sheep roam 
at large and the wool is the principal or only part of 
the industry sold, the cost is one thing. In another 
part of the country where the mutton is sold at a 
profit that pays for the whole outlay the amount 
resulting from the sale of the wool is all profit and 
the wool costs nothing. The test is an impossible 
one. Even the American Protective Tariff League 
has admitted that " production cost in our own coun- 
try is so widely variant as to be of little value." And 
Mr. Taft's so-called Tariff Board has stated, " As is 
well known, wages or earnings are not necessarily 



78 Free Trade vs. Protection 

an index of the labor cost of any particular process 
of manufacture. The labor cost per yard depends 
on the relation between wages and output," and 
11 frequently it is found that high wages and low 
labor cost go together." 



FREE TRADE IS FAVORABLE TO THE MAXIMUM OF 
PRODUCTION 

Free trade (meaning a tariff for revenue only) 
would bring the production of the world to a max- 
imum by allowing the citizens of every country to 
produce whatever they might find by experience 
they could produce at the least expense, and to sell or 
exchange it wherever they could to the best advan- 
tage for what the citizens of those countries could 
find in the same way, through experience, that they 
could produce at the least expense. This is in accord- 
ance with fact and nature ; is no theory. From this it 
follows that free trade means abundance and cheap- 
ness, while protection means scarcity and dearness. 
Protectionists claim that goods and products must 
not be allowed to come into this country and be sold 
at low prices, because similar goods, etc., could not 
then be made here with profit. They think, then, 
that it is the making of the goods that we want to 
secure, not the goods themselves. But this attitude 
of protectionists is an admission that goods may be 



Free Trade 79 



too plentiful and cheap and that protective duties 
will make them less plentiful and more costly. The 
duty, then, is in the interest of scarcity and conse- 
quent dearness. It is, therefore, at the expense of 
the consumer and adverse to his interest. Free trade 
(meaning a tariff for revenue only) recognizes the 
rights of property, the right to freedom of choice 
and action, the right to buy where everyone pleases 
and to sell where he pleases. Protection says, You 
shall not buy in a foreign market, even though you 
may find there what you want at a lower price and 
of better quality, unless you pay a penalty for it, a 
tax called a duty, to prevent your buying in that mar- 
ket. The protectionist says that his system will 
establish a new industry here, and then we shall no 
longer be dependent upon Europe for the products 
of that industry, and this will give employment to 
American laborers and will raise their wages so that 
they can compete with "the pauper labor of 
Europe." But the argument used in Europe is just 
the opposite. They say there that they must have 
protection to enable their laborers to compete with 
the high-priced laborers in the United States. We 
are not informed by protectionists why the more effi- 
cient, resourceful, skilled laborers of our country 
should need protection against the pauper, inefficient, 
ignorant laborers of other countries. There is obvi- 
ously more in the claim that they need protection 
against us. 



80 Free Trade vs. Protection 



A NEW INDUSTRY IS NOT DUE TO PROTECTION 

As a further illustration of the springing up of a 
new industry take the hat industry of New England 
as given in Gallatin's Report of 1810, in an appen- 
dix:* 

A girl in the town of Wrentham, on the Rhode 
Island border, found that she could make a straw 
hat as good as the imported ones then in fashion. 
Soon every girl in the region made her own hat, and 
the industry of making them for sale was quickly 
established and grew to large proportions. . . . 
Four thousand persons were employed in the manu- 
facture of hats in Massachusetts alone. A million 
and a half hats were made, of which three-fourths 
were sold beyond the state. Women's straw bonnets 
and straw hats were made in Norfolk County in the 
same state in great numbers.* 

A dealer in gold leaf picked up from the floor a 
spool of tape that rolled down from his mother's 
lap. As he handed it back to her it suddenly occurred 
to him, " Why not wind strips of gold leaf, in vari- 
ous widths, on spools, and save much waste of the 
gold?" He took out a patent, carried on the busi- 
ness, and made a fortune out of it. Inventive genius 
gives rise to new industries, and protection does not. 

* Gallatin's Report, 1810, in American State Papers; Finance, 
vol. 2, p. 439; and cited in Stanwood, American Tariff Contro- 
versies in the Nineteenth Century, vol. 1, p. 130. 



Free Trade 81 



FREE TRADE MEANS FREEDOM OF TRADE SUBJECT TO 
NECESSARY TAXATION 

Free traders hold that the welfare of all mankind 
is best subserved by having each country follow as 
closely as it can the plan of allowing everyone to 
trade where he finds he can trade best, subject only 
to such taxes as may be necessary to carry on the 
government of the country. In the same way liberty 
does not mean license \ freedom to do whatever each 
one pleases, but freedom subject to certain necessary 
limitations. 

It must always be remembered that when an excise 
tax is imposed corresponding to — that is, of the 
same amount as — the duty upon imports of the same 
article, the result is a tariff for revenue only, for 
none of the higher price, on account of the tax, goes 
into the pocket of the home producer, while the con- 
sumer pays the same price whether he buys the 
domestic or the imported article. 

PROSPERITY UNDER A TARIFF FOR REVENUE 

In 1842, under a tariff for revenue, with but little 
protection, Charles Dickens wrote from Boston, with 
some of the exaggeration, it must be admitted, we 
might expect from him, "There is no man in this 
town or in this State of New England [sic] who has 
not a blazing fire and a meat dinner every day of his 



82 Free Trade vs. Protection 

life. A flaming sword in the air would not attract 
so much attention as a beggar in the streets." 

How is it now? Since we have had high protec- 
tion the condition of our laboring classes has steadily 
moved towards that of the laboring classes of Eu- 
rope. I do not say that protection has done it. That 
would be to repeat the same error in logic that pro- 
tectionists make when they claim that high wages are 
due to protection. The Lawrence strike and the 
disclosure of the awful condition of the laborers 
there has awakened the American public to realiza- 
tion of the fact that labor in this country is approach- 
ing the conditions of labor in Europe and that 
protection has not prevented it. 

OUR GREATEST PROSPERITY WAS UNDER APPROXI- 
MATE FREE TRADE, FROM I 846 TO I 86 1 

From 1846 to 1857 the average tariff duties were 
twenty- four per cent. From i857toi86i they were 
about nineteen per cent. During these fourteen years 
of low duties imports into the United States increased 
from 118 millions in 1846 to 354 millions in i860, 
or 200 per cent. In the same period our exports 
increased from 109 millions in 1846 to 333 millions 
in i860, or 204 per cent. Increased duties, combined 
with the war, put an end to this rate of increase, but 
whether under low tariff or high tariff, exports con- 
tinued about even with imports. All these details 



Free Trade 83 



prove the correctness of the statement that com- 
merce is barter or exchange of commodities, and 
that the sum of the exports is equal to the sum of the 
imports. Therefore, if it be desirable to increase 
our exports, the duties must not be so high as to 
exclude imports. Franklin Pierce says, "The pres- 
ent annual loss to American exporters, brought about 
by the protective tariff, is a diminished sale of at 
least a billion dollars a year." * Not only is this com- 
mercial benefit thus lost to us ; it is lost, also, to those 
with whom we would trade. The loss is mutual. So 
is the loss of the closer bond between us that this 
commerce would bring us. Nations seldom go to 
war with those in close commercial relation with 
them. Increased commerce means diminished prob- 
ability of war. 

The census of i860 shows that the national wealth 
increased, from 1850 to i860, 126 per cent, the 
greatest percentage of increase in any decade in our 
history. This shows that later periods of increasing 
prosperity were not due to any protective tariff, and 
that protection was no longer necessary. According 
to Carroll D. Wright, who is admitted to be high 
authority, the capital in the United States employed 
in manufacturing increased during this period of 
1850 to i860 from 533 millions to 1,009 millions. 
According to protectionist logic this shows that 
increased protection lessened our rate of increase. 

* The Tariff and the Trusts, p. 233. 



84 Free Trade vs. Protection 



SENATOR MORRILL ON OUR GROWTH DURING THIS 

PERIOD 

Commenting on this " prodigious growth," Sen- 
ator Morrill, who is now looked upon as the father 
of protection in this country, said, in a speech in 
Congress in 1862, "Such facts should make every 
man with an American heart in his bosom glow with 
pride." And again, in a speech in 1867, referring 
to i860, he said, " And that was a year of as large 
production and as much general prosperity as any, 
perhaps, in our history." 

Then why was protection any longer necessary? 
The fact is, we have prospered under all tariffs, but 
most of all under a low tariff. We have prospered 
in spite of protection. Natural laws are more power- 
ful than artificial ones, and in the end will prevail 



CHAPTER VI 

FREE TRADE (Continued) 

FUTILITY OF THE CLAIM THAT PROSPERITY IS DUE 
TO PROTECTION 

npHINK of our unrivaled country, its immense 
■*■ area, its varied climate, soil, and products, its 
coal, petroleum, natural gas, iron, copper, gold, 
silver, forests, prairies, rivers, lakes, great inland 
seas, harbors, a free people, with the best political 
system in the world, in spite of its faults, attracting 
the enterprising and industrious to our shores, all 
giving to every American and to every European 
coming here every opportunity to develop and to 
become whatever his talents fit him for ! Think of 
our free school system, open to all; our free insti- 
tutions and great business opportunities, the best in 
the world for the development of economic strength; 
our absolute free trade between the inhabitants of 
the states of the Union! 

Along comes the protectionist and he tells us that 
all these are not the cause of our great prosperity. 
They are all in vain. " I made all this prosperity 
with my taxes. If it had not been for me and my 
4 American system' you could not have done all 

85 



86 Free Trade vs. Protection 

this." What perverse hallucination blinds the Amer- 
ican people and leads them into acceptance of such 
sophistry? 

The truth is, the prosperity we enjoy is the pros- 
perity that God, through the gifts of nature, aided 
by our free institutions and equal opportunity and 
freedom to all, has given us, less the artificial bur- 
dens the meddling protectionists have laid upon us 
by their protective duties. For taxes do not create 
wealth; they only consume wealth already accumu- 
lated. The wealth disclosed by the census is the 
wealth that remains after taxation has done its work 
upon us. We might as well claim that slavery caused 
prosperity because the United States prospered under 
slavery, as to claim that our prosperity is due to 
protection. To use a homely illustration — I go out 
in the morning to look at the sky and I find fine 
weather, with the sun shining; but soon clouds 
gather, the wind blows, and we have rain. Are we 
to conclude that the cause of the rain was my going 
out to look at the sky? That is the kind of reason- 
ing protectionists give us. Post hoc, ergo propter 
hoc! Because certain events are followed by certain 
other events it does not follow that they are cause 
and effect. We must first connect them and show 
that they depend on each other. Yet once every 
four years, at each recurring political campaign, we 
are assured that the country's prosperity is due to 
protection, and, therefore, no reduction in duties 



Free Trade 87 



must be allowed. Manufacturers unite and pass 
resolutions that they publish in the newspapers, with 
scare headlines, that if A. is elected their mills will 
be closed, or they pass the word around among their 
mill hands that wages will be reduced, in order to 
frighten them into voting for continued protective 
duties. We are told that if we are prosperous it is 
due to protection. If we have a panic, and bad times 
follow, we are told it is due to the want of sufficient 
protection, or the system is not yet " scientifically 
perfect," and we must have another revision of the 
tariff, protectionists always meaning thereby, upward 
revision, while giving the public to understand it is 
to be downward revision. Or, we are told that if 
free traders would only stop talking and would let 
the tariff alone we would not have any panic. Then, 
as Sumner suggests, the prosperity produced by pro- 
tection is so precarious that even talk about free 
trade will destroy it. But the tariff never can be let 
alone, for even protectionists will not let it alone. It 
is true that those who are encircled by it do not want 
anything more said about it, but there are always a 
lot more, whose industries are not within the 
charmed circle, who are clamoring for admission. 
Yet some must be left out, for if all were admitted 
it would be the same as if all were rejected. There 
would be no special advantage reserved to those 
admitted if all were admitted and the system would 
fail. An illustration of the beneficent results sought 



88 Free Trade vs. Protection 

to be achieved through admission was presented to 
us a few years ago. Some enterprising Yankees con- 
ceived the idea of going into the " sardine business" 
on the coast of Maine. So they put small young 
herrings in cottonseed oil in tins bearing a label, 
" Pure Sardines in Olive Oil," with a French name. 
Then they petitioned Congress for " protection" for 
their " infant industry." So we find constantly that 
even those who believe in protection will not let the 
sacred ark of the tariff alone. For still stronger 
reasons free traders (meaning those who want a 
tariff for revenue only) will not let it alone, for they 
know it is wrong and they do not propose to let it 
alone until by successive gradual reductions it shall 
become a tariff for revenue only. 

FREE TRADE WANTED AS A RIGHT 

Lincoln used to tell a story about his hearing his 
two boys making a noise in the next room. He asked 
what was the matter. "It's Tad trying to get my 
knife," said Robert. " Oh, let him have it, Bob, to 
keep him quiet," said Lincoln. "No," said Bob; 
" it 's my knife, and I need it to keep me quiet." Just 
so the free trader needs his rights to keep him quiet, 
and he means to have them, too. 

FREE TRADE IS OF UNIVERSAL APPLICATION 

The principles of free trade are universal and of 
universal application, while those of protection are 



Free Trade 89 



narrow, restrictive, and of limited application. 
Many protectionists admit that free trade (mean- 
ing a tariff for revenue only) is best, if all nations 
would adopt it; that protection will pass away with 
increase of cosmopolitanism. The free trader not 
only believes in free trade ; he follows its principles 
in the daily affairs of life. He buys wherever he 
can get the best at the lowest price. The protec- 
tionist, although in theory he believes in protection, 
disregards its principles in the daily affairs of life, 
and becomes in fact a free trader, for he, too, buys 
what he wants, even in the conduct of his business, 
wherever he can get the best at the lowest price. 
Instead of paying a higher price for the protected 
machine made by his American neighbor, he buys 
it in England or Europe if he finds he can get it 
better or cheaper there. And no one is more clam- 
orous than he is for free trade in the raw material 
for his own industry. Everyone, be he free trader 
or protectionist, buys in the cheapest and sells in 
the dearest market, and he does right in doing so. 
If it is to the advantage of one to do so, it is to the 
advantage of all. 

UNEXPECTED ADVANTAGES FOLLOW FREE TRADE 

Note the results in England of admitting free of 
duty the bounty-fed sugars of other countries. Not 
only did the use of sugar increase, there was a re- 



90 Free Trade vs. Protection 

markable change and new growth of the business 
of putting up jams, jellies, marmalades, etc. Im- 
mense quantities of fruits were brought into the 
country in British steamers from various parts of 
the world, to be preserved with the low-priced, 
bounty- fed, imported sugar; and these preserved and 
canned fruits and products were then exported with 
profit to every part of the world. Thus, out of free 
sugar there sprang up a new industry. The next 
time my reader eats Scotch orange marmalade, re- 
member that it is in part paid for by the bounty 
paid by the government of the country paying the 
bounty, probably the Russian government, on the 
sugar that went into the making of that marmalade. 
If it were not for the duty levied on these products 
in this country to help to keep them out of the 
country, the families of many more of our working 
classes could be supplied with these necessary deli- 
cacies, for such they are now admitted to be. Doubt- 
less the same policy would bring about equally good 
results in the United States, with the great addi- 
tional advantage of freeing us from the tyranny, 
rascality, and greed of one of the most abominable 
of our many abominable trusts — the Sugar Trust. 

FREE TRADE IS NATURAL, PROTECTION IS ARTIFICIAL 

Thousands of disingenuous youths graduate from 
our colleges every year. In the impartial truth- 



Free Trade 91 



seeking atmosphere of their respective colleges they 
have listened to the teachings of the different schools 
of political economists, as to the merits, the correct- 
ness, and the truth of protection and of free trade. 
They are graduated in firm faith well founded, in 
free trade, generally. Many of them go into their 
fathers' offices and factories and in a few years 
probably a majority of them become protectionists. 
The reason is obvious — they become blinded by 
their own selfish interests. These are the men who 
are pointed out as being free traders theoretically, 
but protectionists when actual experience has taught 
them the benefits that accrue from protection. This 
means that they have found that protection puts 
money into their pockets and therefore they con- 
clude it is the best system. It is no answer to this 
to say that those youths who remain free traders, 
remain so because it is for their interest to remain 
so. This does not impair the force of the argument 
that as the good of the greatest number is best sub- 
served by consulting the interest of the greatest 
number, and as the greatest number, the whole 
people, are consumers, therefore free trade is the 
right policy to follow, because free trade is the only 
system that consults the interest of the consumers. 
It is admitted that the great majority of protection- 
ists, as well as the great majority of free traders, 
are honest, sincere, and patriotic; alike believing 
that the system each urges is the best for the country. 



92 Free Trade vs. Protection 

But it must be remembered that men who are en- 
gaged in business enterprises, especially those en- 
gaged in working our great natural resources, have 
their own interests to subserve, naturally and prop- 
erly enough, of course, and this tends to blind their 
judgment and their capacity to reason correctly when 
their own interests are at stake. In the language 
of the man on the street, they are not in business 
for their health, but to make money. Most of the 
owners of our forests, mines of coal, iron, gold, 
silver, copper, borax, salt, etc., do not care for the 
future. It is for their interest to keep out of the 
country all similar products from other countries, 
in order that they may convert into money at as 
high a price as possible and as fast as they can, 
these natural resources that they own. Provided 
they succeed in this, they do not stop to consider 
what later generations will do. Therefore, they 
seize eagerly any arguments, however specious, that 
enable them to accomplish their ends. 

"free trade" is a relative term 

While we look upon Great Britain as a country 
with a tariff for revenue only — that is to say, as a 
free trade country — in Japan Great Britain is 
looked upon as a country with a protective tariff 
because the English Government levies duties upon 
certain products of Japan. The same tariff may, 



Free Trade 



93 



therefore, be looked upon as a free trade tariff by 
the people of one country and as a protective tariff 
by the people of another country. 

BENJAMIN FRANKLIN WAS A FREE TRADER 

In a letter to the Count de Vergennes, dated 
March 15, 1783, Dr. Franklin wrote : 

In general I would only observe that commerce, 
consisting of a mutual exchange of the necessaries 
and conveniences of life, the more free and unre- 
strained it is, the more it flourishes ; and the happier 
are all the nations concerned in it. Most of the 
restraints put upon it in different countries seem to 
have been the projects of particular persons for 
their private interest under pretense of public good. 

PRESIDENT WILSON A FREE TRADER 

When speaking before the Tariff Board in 1882, 
Woodrow Wilson, then a professor, said: 

No man with his senses about him would recom- 
mend perfect freedom of trade in the sense that 
there should be no duties whatever laid on imports. 
The only thing that free traders contend for is that 
there shall be only so much duty laid as will be 
necessary to defray the expenses of the government, 
reduce the public debt, and leave a small surplus for 



94 Free Trade vs. Protection 

accumulation. But that surplus should be so small 
that it will not lead to jobbery and corruption of the 
worst sort.* 

EVERY PROTECTIONIST IS A FREE TRADER AT HEART 

The most thorough-going protectionist throws his 
protection principles to the wind in the conduct of 
his own business, when they conflict with his own 
interests. While clamoring for protection high 
enough to keep foreign machinery out of the country, 
he buys the particular machines he uses in his own 
business where he can get them at the lowest price, 
without regard to the injury he is thereby inflicting, 
according to his own protection principles, upon the 
protected American industry, by not buying the 
poorer if cheaper home-made article. The report 
of the Tariff Board of 1911-12 on wool and woolens 
states that in our worsted mills eighty per cent of 
the machinery used for the processes, from scour- 
ing to the finished yarn, is imported. Of the Brad- 
ford frames, ninety per cent are imported. All of 
the so-called " French Combs " and worsted spinning 
machines are imported. 

Paraphrasing a statement that has gained wide 
currency, I maintain that if you scratch the skin of 
a protectionist you will find the blood, not of a 
free trader (one who wants a tariff for revenue 

* Quoted by Representative Hill in debate in Congress, July 
10, 1912. Congressional Record, p. 9405. 



Free Trade 95 



only) , but you will find the blood of an absolute free 
trader (one who wants the custom house abolished 
so far as his own imports are concerned). 

ILLUSTRATION 

In Protection and Free Trade, Henry George tells 
this anecdote: 

A few months ago I found myself one night with 
some other travelers on the smoking car of a Penn- 
sylvania limited express train. One told how, com- 
ing from Europe with a trunk filled with presents 
for his wife, he had significantly said to the inspector 
detailed to examine his trunks, that he was in a 
hurry. "How much of a hurry?" said the official. 
" Ten dollars' worth of hurry." The inspector took a 
quick look through the trunk and remarked, " That's 
not much of a hurry for all this." I gave him ten 
more, said the story teller, and he chalked the trunk. 
Then another told how, under similar circumstances, 
he had placed a magnificent meerschaum pipe so that 
it would be the first thing seen on lifting the lid of the 
trunk, and when the officer admired it, had replied 
that it was his. The third said he simply put a 
greenback conspicuously in the first article of lug- 
gage ; and the fourth told how his plan was to crum- 
ple up a note and put it with his keys in the officer's 
hands. Here were four reputable business men, as 
I afterwards found them to be — one an iron worker, 
one a coal producer, and the other two manufac- 
turers—men of at least average morality and pa- 



96 Free Trade vs. Protection 

triotism, who not only thought it no harm to evade 
the tariff, but who made no scruple of the false 
oath necessary and regarded the bribery of customs 
officers as a good joke. I had the curiosity to edge 
the conversation from this to the subject of Free 
Trade, when I found that all four were staunch 
protectionists. 

Webster's argument for freedom of commerce 

Stanwood quotes one of Webster's "most lucid 
arguments," when considering the fact that work- 
men in the iron mines of Russia and Sweden earned 
no more than seven cents a day, and as freight from 
Sweden had been eight dollars a ton, which was not 
more than the cost of fifty miles of land transpor- 
tation in the United States, he said:* 

Stockholm, therefore, for the purpose of this 
argument, may be considered as within fifty miles 
of Philadelphia. Now it is at once a just and a 
strong view of this case to consider that there are 
within fifty miles of our market vast multitudes of 
persons who are willing to labor in the production 
of this article for us, at the rate of seven cents per 
day, while we have no labor which will not com- 
mand upon the average at least five or six times that 
amount. The question is, then, shall we buy this 
article of these manufacturers and suffer our own 
labor to earn its greater reward, or shall we employ 

* Annals of Congress, 18th Cong., 1st Session, p. 2065. 



Free Trade 97 



our own labor in a similar manufacture and make 
up to it, by a tax on consumers, the loss which it 
must necessarily sustain ? 

To this Stanwood replies:* " The argument was 
an exceedingly strong one from every point of view 
save that of the policy of establishing the industry 
at home and rendering the country independent of a 
foreign supply " [Italics are mine.] 

But in the interests of peace on earth and of the 
highest civilization, I contend that it is extremely 
desirable that nations shall be dependent upon each 
other. Independence of a foreign supply, instead 
of being desirable, is undesirable. For if we are 
dependent upon some other country for some prod- 
uct, equally so is that country dependent upon us for 
some other product taken in exchange. The greater 
the interdependence of states the more peaceful is 
their attitude towards each other. I do not ignore 
Mr. Roosevelt's claim that this would be an injury 
to the manly virtues that are stimulated by war. If 
so, then the peaceful attitude of the inhabitants of 
the States of the United States towards each other 
and their close interdependence, instead of being cul- 
tivated as part of the beneficent effects of our Union, 
are to be deprecated, because tending to injure the 
martial tone of our people and leading to loss of the 

* American Tariff Controversies in the Nineteenth Century, 
1st vol., p. 234. 



98 Free Trade vs. Protection 

manly virtues that can only be kept alive by culti- 
vating independence of each other in the different 
states. Is not this a reductio ad absurdum of the 
argument? Will any one maintain that it is well 
for the states of our Union to be interdependent, but 
that it is not well for states not in a union to be 
interdependent? 



CHAPTER VII 

PROTECTION 

PROTECTIVE LEGISLATION OF GREAT BRITAIN A 
CAUSE OF THE AMERICAN REVOLUTION 

T^HE English Parliament forbade even the mak- 
•*- ing of horseshoes in the American Colonies, 
lest it interfere with the same business in England. 
Our Puritan forefathers read the Bible, but were 
not allowed to print it, lest it interfere with the 
profits of the English printers. Legislation of this 
kind was one of the causes of the American Revo- 
lution. It reminds us of some of the narrow, re- 
strictive views of protectionism. It was legislation 
of this nature that drew from the Congress of the 
American Colonies in 1765 a resolution "that the 
restrictions imposed by several late acts of Parlia- 
ment on the trade of these colonies will render them 
unable to purchase the manufactures of Great 
Britain." Similarly, the restrictions imposed by pro- 
tection on the trade between foreigners and Ameri- 
cans will render it impossible for these foreigners 
to purchase the manufactures of the United States. 
This resolution of our Congress of 1765 is inter- 
esting because it shows that the men whom we now 

99 



IOO Free Trade vs. Protection 

revere as "the Fathers" perceived that trade or 
commerce is the exchange of products. At the end 
of the Spanish war, Congress being under control 
of protectionists, we began a similar narrow policy 
against the Philippines, but fortunately we are 
gradually passing out of it. 



THE AMERICAN COLONIES "PROTECTED" THEM- 
SELVES AGAINST EACH OTHER 



During our colonial period and until the adoption 
of the Constitution of the United States, partaking 
of the general ignorance of economic principles, 
Americans undertook to carry out the foolish idea 
of having the colonies or states "protect" them- 
selves against each other. But they never thought 
of calling it "the American system." For instance, 
the citizens of New York had to pay a duty on 
every load of wood from Connecticut and on all 
eggs imported from New Jersey. A meeting was 
held in New London and ail the dealers signed an 
agreement not to send any goods to New York. 
This was our first "tariff war." But the New Lon- 
doners soon found that if they sent no goods to 
New York, the goods they wanted in exchange would 
not come to New London from New York. They 
soon learned that the notion then current that out- 
side trade was an evil to be kept out or limited as 
much as possible, in order to foster their "home 



Protection 101 



industries " was wrong. They copied what was done 
in Europe, believing, as they did abroad, that com- 
merce was something in which only one side made a 
profit out of the other side. They had not yet awak- 
ened to a conception of the principle that both sides 
gained or else commerce would not be carried on. 
The people of this country have not yet fully awak- 
ened to it. When they do, they will see that pro- 
tection is a drag on the country, because it prevents 
the free play of business intercourse between the 
inhabitants of different countries, to the mutual 
benefit of all. 

Here in this country, before the Constitution of 
the United States was adopted, protection existed. 
The Constitution was adopted and with it free trade 
between the states. Did any harm result from it? 
No. Industry and commerce sprang at once into 
unexampled activity and the consequent free trade 
between the inhabitants of the different states. 
There is no doubt that in the same way, increased 
industry and commerce with the inhabitants of 
Europe would result from gradual emancipation 
from the fetters that protection now imposes upon 
us all. 

PROTECTION HAS ALWAYS ASKED FOR MORE AND 
MORE PROTECTION 

At first protectionists only asked that American 
manufacturers be placed on an equality with for- 



102 Free Trade vs. Protection 

eign manufacturers sending their goods to this 
country, although the cost of freight gave them 
already an advantage. Their request was granted, 
and ever since then, at each revision of the tariff, 
their demands have increased. It is now evident 
that too much protection has been given them, for 
they are underselling foreign manufacturers in their 
own home markets with lower prices than they are 
selling the same products for here at home to their 
own countrymen. They can do this because the 
tariff keeps foreign goods out, here, but in Europe 
they sell in competition with the markets of the 
world, especially in England. It is evident the duties 
should be gradually reduced. But they claim that 
this will close their shops. Then their business is of 
such a peculiar nature that they cannot sell to Ameri- 
cans here at home at the same prices they sell to 
foreigners across the sea ! The Republican party 
is not to be trusted on the subject of revision of the 
tariff, for it has broken its promises to do so. When 
the party started out in 1861, with the necessity for 
raising more revenue for war expenses, it said noth- 
ing about protection. Little by little, protection 
came to the front. At first protection was to be 
moderate and limited, even according to the claims 
of its friends. It demanded and obtained more and 
more until it became the dominating influence in 
Washington. It became evident at last that pro- 
tection was overdone and the Republican party 



Protection 103 



promised reduction. It violated this pledge when 
Mr. Blaine, elected Speaker of the House, broke his 
promise to appoint Garfield as Chairman of the 
Committee of Ways and Means. It violated its 
pledge again when it passed the tariff act of 1883, 
the Republican tariff commission having advised a 
reduction of twenty to twenty-five per cent in its 
report of 1882, while the tariff of 1883 granted a 
reduction of only four per cent. These Republican 
pledges were violated again when the McKinley bill 
was passed and the doctrine was accepted that pro- 
tection causes wealth. When they were violated 
again by the passage of the Payne-Aldrich bill, the 
country was aroused, but the advocates of high pro- 
tection, under the direction of the- "big business " 
interests of the country, have still continued oppo- 
sition to the sentiment of the people of this country, 
oblivious of the fact that the greatest danger of 
precipitating too radical revision of the tariff lies in 
resistance to a moderate revision. One of the de- 
vices for resisting revision (meaning downward re- 
vision) — one that has been especially insisted upon 
of late years by high protectionists — is that no 
changes should be made in the tariff schedules until 
after we shall have obtained the report of scientific 
experts. But many excellent reports of this nature 
have been submitted to Republican Congresses in 
past years, and they were thrust aside with scorn 
through the control of Congress by the great busi- 



104 Free Trade vs. Protection 

ness interests of the country. What reason have 
we to suppose we shall fare any differently if we 
repeat the experiment? We have tried over and 
over again to carry out the theory that the tariff 
must be reformed by its friends, and it has miserably 
failed. As well expect a convention of barn burners 
to improve the laws concerning arson. Now let us 
try reformation of the tariff by its enemies, the 
method used in reforming other abuses. 

PROTECTION WAS NOT A PART OF THE REPUBLICAN 
party's PROGRAM 

It was only step by step, little by little, that the 
Republican party committed itself to protection. 
It is a part of the irony of history that the G. O. P., 
the party of freedom, that struck the shackles from 
millions of slaves, has now become the party of 
economic slavery. But there are still free trade 
Republicans as well as protectionist Republicans, and 
there are protectionist Democrats as well as free 
trade Democrats. Party lines were not drawn on 
lines of protection against free trade until the leaders 
of the Republican party, led into unfortunate alli- 
ance with u big business" interests, favored the 
cause of monopoly and special privilege. There 
are, however, too many free traders, whether Demo- 
cratic or Republican, who abandon their principles 
as soon as an item in a schedule touches anything 



Protection 105 



relating to business in their own district. It is these 
renegades who have defeated tariff reform in a Con- 
gress in which the Democratic tariff reformers have 
been in the majority. The presence of such rene- 
gades in Congress may still be looked for, and the 
only way to resist and overcome their malign influ- 
ence will be to have so large a tariff reform majority 
in command of Congress that their votes cannot 
prevent revision with downward rates. 

THE REPUBLICAN PARTY WAS NOT PROTECTIONIST 
UNTIL AFTER THE WAR 

Nearly sixty years ago the Republican party came 
into existence, and after fumbling around awhile as 
to its distinctive grounds for being, settled down, 
when the war came, as standing for the preservation 
of the Union, and finally, in order to preserve the 
Union, for the abolition of slavery. Protection 
formed no part of its program, for, without regard 
to party, the country had settled down into a policy 
of virtual free trade, that is to say, a tariff for 
revenue only. When the leaders of the Republican 
party found it necessary to raise the tariff rates, in 
order to increase the revenue to meet the expenses 
of the war, their tone wa$ apologetic. It was ex- 
plained that the increase was to be moderate and 
temporary only. From 1846 to 1857 tariff duties 
averaged 25.5 per cent, and from 1857 to 1861 they 



106 Free Trade vs. Protection 

averaged 20.5 per cent. Every protectionist of 
today would admit that these rates were to produce 
revenue only and not to protect. Propose these 
rates now to any protectionist and he would answer 
that under them all the mills and manufacturing 
establishments in the country would have to close. 
Yet we not only prospered under these low tariffs 
for revenue only, we actually grew rich faster under 
them than we ever have since then under high pro- 
tective duties. Even then the country had outgrown 
the necessity for protection. 

WHAT PROTECTION CLAIMS 

The protectionist starts out with the assumption 
that he has a panacea for the ills of the nation; that 
he understands political economy and its laws better 
than its teachers and consequently commerce and 
the laws of trade, and he knows better how busi- 
ness should be run than people do when left to run 
it themselves; that, instead of leaving the intercourse 
of mankind and the interchange of their products 
to the free play of men's wants and their ability to 
meet them, he can better their exchange. He as- 
sumes that, left alone, merchants engaged in com- 
merce will blunder, and therefore he, who knows 
how to make things go better, proposes to take a 
hand. He tells us the way to do this is to pick out 
a lot of ordinary men, elect them to Congress and 



Protection 107 



then let them impose such tariff duties upon all the 
people as will best subserve the interests of those 
who are to be thus benefited, under the advice and 
guidance of these interests, and to make such changes 
from time to time as these beneficiaries may inform 
Congress from time to time are necessary for the 
improvement of their different businesses, under the 
plea that this will diversify our industries, will be 
only moderate and temporary, will reduce prices in 
the end, will protect infant industries, will raise 
wages, will keep out goods produced by cheap pauper 
labor abroad, will develop our resources, etc. It 
is with all due respect to members of Congress that 
I speak of them as ordinary men, for, although 
there are always members with marked ability, nat- 
ural leaders of men, it would be easy to pick out a 
body of much better, abler men at home who never 
are elected to Congress. Certainly the body of men 
constituting the Congress of the United States from 
time to time is not fitted to pass upon questions of 
economics that experts cannot agree upon, and cer- 
tainly no rational method has ever been followed 
by Congress in determining tariff rates. The very 
fact that Congress, from time to time, has created 
commissions of experts to ascertain what these rates 
should be, shows that Congress recognizes its own 
inability to solve the problem. The further fact 
that the valuable reports and suggestions of these 
many commissions have not been adopted by Con- 



108 Free Trade vs. Protection 

gress, but have been treated as the footballs of poli- 
tics, to be kicked and banged about, furnishes further 
proof of the incapacity or the inability of Congress 
to determine the problem, so long as the protected 
interests are allowed to frame the schedules or to 
have a voice in passing upon the rates suggested by 
disinterested experts. 

Beginning with the admitted necessity of increas- 
ing the revenue to meet the enormous expenses of 
the Civil War, after years of successful administra- 
tion of the finances of the country under a tariff 
which, if not purely a tariff for revenue only, was 
one approaching that condition and would be so con- 
sidered now by protectionists, rates were raised, and, 
foreseeing that such increases in rates would be more 
or less protective in nature, it was urged that the 
increase would be moderate in amount and tempo- 
rary only. Excise duties were imposed at the same 
time, under the new name of M internal revenue 
taxes," as we were still near enough to the Revolu- 
tion for the term "excise duties" not to be pleasant 
to American ears. Excuses were offered to placate 
the feeling that the special privileges to be accorded 
to manufacturing interests through protection were 
undemocratic and un-American. We were told that 
we must build up new industries and supply our own 
wants, and thus create large home markets. We 
were assured that goods would become cheaper, of 
better quality, of greater variety, and we were to 



Protection 109 



have a surplus that would be sold all over the world. 
It was conceded that unless these results followed, 
the protected industries would be carried on at the 
expense of the whole people, and this was certainly 
an undemocratic proceeding, entirely at variance 
with American principles of government. But after 
half a century these results have not followed. On 
the contrary, duties have kept on going higher and 
higher, while internal revenue duties have been made 
lower and lower without regard to maintenance of 
any equivalence between the two systems, under the 
guidance of the protected interests. The appetite 
for protection grew and it was found to be easier 
to make money by sending men to Congress who 
would grant still further concessions of the special 
privilege of levying a tribute upon consumers, than 
by following old fashioned business ways. The 
" infant industries" of our country have grown to 
be giants, and they have used their power and 
wealth unlawfully to coerce Congress into giving 
them more and more, while in return for favors 
received, they have contributed to the campaign 
funds of our political parties, sometimes at the same 
time to those of both parties, until we have been in 
dire danger of falling into a condition of government 
controlled by the trusts. The rapacity of the pro- 
tected industries has kept on increasing from year 
to year. The history of tariff legislation by Con- 
gress during the last fifty years is a story of ever- 






no Free Trade vs. Protection 

increasing greed and corruption, until it has become 
a national disgrace. The successive tariff revisions 
of 1883, 1890, 1894, 1897, and 1909 all tell the 
same disgraceful story of log-rolling, of jokers, of 
trickery, deceit, and fraud. 

INFLUENCE OF BUSINESS INTERESTS IN LEGISLATION 

One of the evil consequences of protectionism 
that has imposed upon the country protective tariff 
after protective tariff, with ever-increasing duties, 
has been the constantly increasing recognition of 
business interests in framing tariff schedules. As 
Miss Tarbell says:* 

Moreover, it was demonstrated clearly in 1883 
that the size of the duty is according to the size of 
the organization. The quinine makers, even with 
Mr. Kelley's help, were unable to get their product 
off the free list, where it had been put in 1879, but 
they were a feeble folk — only four of them in the 
country ! The pottery people, on the contrary, 
received an advance of some thirteen per cent on 
their wares, for they were strong in Ohio and New 
Jersey. Mr. Joseph Wharton, standing alone, had to 
submit to a reduction of fifty per cent on his nickel ; 
standing with iron men he suffered a reduction of 
only four per cent on his pig iron. It was a great 
lesson in the value of organization and numbers. 

*The Tariff in Our Times, p. 132. 



Protection 1 1 1 



IF PROTECTION IS SUCH A BENEFIT OUR STATES 
SHOULD ADOPT IT 

Section 10 of Article i of the Constitution of the 
United States provides: 

No state shall, without the consent of the Con- 
gress, lay any imposts or duties on imports or 
exports, except what may be absolutely necessary for 
executing its inspection laws; and the net produce 
of all duties and imposts laid by any state on imports 
or exports shall be for the use of the treasury of 
the United States, and all such laws shall be subject 
to the revision and control of the Congress. 

Therefore each and every State of our Union, 
with the consent of Congress, may set up its own 
system of protection, a fact that would seem to have 
been forgotten by protectionists. For if protection 
is such a blessing and so enriches the state practicing 
it, as protectionism maintains, all the states can get 
rich by thus taxing each other's products. And 
further, according to sound protection doctrine, the 
wages of the working men would be much higher. 
This scheme would have another great advantage; 
that is, as all the duties thus levied would be paid 
into the treasury of the United States, the vast sum 
thus realized would be more than enough to pay all 
the expenses of the Federal Government. The ex- 



112 Free Trade vs. Protection 

cess, well invested, would provide an old age pension 
for every American. Thus we should be able to 
lift ourselves all up together by our boot straps! 

THE INCREASE IN PRICES THROUGH PROTECTION 

GOES INTO THE POCKETS OF THE PROTECTED 

MANUFACTURERS 

The workingman should remember that every- 
thing he wears and many things he eats and uses 
cost him from fifty to one hundred and fifty per cent 
more than they would but for the tariff. He should 
remember, further, that this increase in price does 
not go into the treasury of the United States, but 
into the pockets of the protected manufacturers. It 
is calculated that nineteen-twentieths thereof goes 
into the treasuries of the protected trusts. This is 
the penalty paid by the people of the United States 
for their misplaced confidence in the false principles 
of protection. 

A BURDEN ON THE BACKS OF THE WORKINGMEN 

We often hear it said that every peasant in Eu- 
rope carries the burden on his back of the cost of 
supplying and keeping a soldier. We have no peas- 
ants here, but it would be equally true to say that 
every workingman in this country carries a heavy 



Protection 113 



burden on his back — his share of these extortions 
of the great trusts that have gradually grown to be 
the industrial giants of the earth, all the time mas- 
querading as infant industries that cannot stand 
without protection. 



THE COUNTRY IS NOT ENRICHED BY DIVERTING CAP- 
ITAL THROUGH PROTECTION INTO BUSINESS IT 
WOULD NOT NATURALLY FLOW INTO 

The protectionist will tell you that a man who 
takes up a new business because he has obtained pro- 
tection for it and becomes a millionaire through the 
tribute the tariff enables him to levy on all other 
Americans forced to buy his, rather than the for- 
eign, product, has enriched the country by estab- 
lishing a new industry. But he has merely diverted 
capital from some old business into his new business. 
We must remember that there is just so much cap- 
ital in the country available for business purposes. 
Therefore the man who went into this new business 
did not create new capital for the business. He 
merely diverted existing capital into a new line of 
business in which more money could be made for 
the man going into it through the special privilege 
conferred upon him by the Government of levying 
a tribute upon every one buying his product. This 



114 Free Trade vs. Protection 

is not real business, it is mere favoritism in order 
to keep a pauper industry going. And because this 
man has thus become rich, it does not follow that 
the country is any richer than it would have been 
had the capital thus artificially stimulated into this 
protected business been left where it already was, 
or left free to be employed in some other enterprise. 
The probability is that if we had never had any 
protection the country would be richer than it is now. 
We have become rich and powerful in spite of the 
tariff, not because of the tariff. There is, or once 
was, in this country an International Free Trade 
Alliance, maintaining that even a tariff for revenue 
is not the most efficient way to raise revenue for the 
Government. Gladstone once said he was inclined 
to think that a better way to raise a revenue could 
be devised than through a tariff of any kind. It is 
to be regretted that the fathers of our country, in 
writing its Constitution, did not forbid any tax upon 
imports as well as upon exports. Protectionism 
claims that if Congress lays a duty high enough to 
bar importation of certain goods (consequently cut- 
ting off the revenue therefrom to the Government) 
the country has become enriched without cost, be- 
cause some one in this country can now make these 
goods. If this be so, the tariff is magic. An army 
and a navy to keep out these foreign goods would 
cost something, but here it takes but a few words to 
do the business. 



Protection 115 



THE THEORY THAT PROTECTION IS DYNAMIC AND 
FREE TRADE IS STATIC 

It is claimed that protection keeps society dynamic 
and progressive and prevents it from becoming 
static, as it would under free trade. These be high- 
sounding Greek words, excellent words for the pur- 
poses they were invented for in our various modern 
tongues — but, after all, what have they to do with 
protection and free trade ? Suppose an English free 
trader were to write a book to maintain the theory 
that free trade keeps Great Britain dynamic and 
progressive, while if protection were adopted she 
would become static, would it not be equally valid? 

PROTECTION MEANS THE SUPPORT, THROUGH A 
TARIFF, OF PAUPER INDUSTRIES 

In treating of the iron industry, Stanwood says:* 

It has been asserted by some writers, on the 
strength of the fact that at various times the domes- 
tic ironmakers had produced nearly enough to supply 
the home demand, that the industry was already 
established and therefore needed no tariff encour- 
agement. This proposition cannot be maintained. 
The industry had never been fairly prosperous save 
when foreign competition was cut off artificially by 

* American Tariff Controversies in the Nineteenth Century, 
vol. 1, p. 233. 



u6 Free Trade vs. Protection 

causes other than the tariff. If it be asserted that 
the reason of its non-success lay in the non-adoption 
of the best methods of production, that assertion is 
itself an admission that the industry was not estab- 
lished. 

I consider an industry to be established when it 
can be shown that since its establishment a century 
or more ago it has been successfully carried on 
whatever changes may have occurred in tariffs. By 
" successfully carried on," I understand is meant a 
sufficient production nearly to supply the home de- 
mand. To hold otherwise is to claim that there 
must be sufficient protection to enable the inefficient 
in that industry to carry it on with profit and thus 
supply the whole demand. In other words, pauper 
manufactures must be given the right to demand toll 
from every consumer of their wares in order that 
they may be enabled to carry on indefinitely an other- 
wise unprofitable business. It is certainly a special 
privilege that is accorded them under such circum- 
stances, for the Government gets no revenue. If it 
does, then the duty is not high enough to effect the 
desired object, the cutting off of the foreign supply 
in order to force the consumer to buy the home-made 
article of the pauper manufacturer. 

In Stanwood's argument that, although a reason 
of non-success may be the non-adoption of the best 
method of production, . . . still that in itself is an ad- 



Protection 117 



mission that the industry was not yet established, I 
find further proof of the lingering in his mind of 
the notion that an industry must continue to be fos- 
tered by protection even though it is carried on at 
a loss, and this can be done by giving it more pro- 
tection. This is exactly the cry of unsuccessful man- 
ufacturers every time there is a tariff hearing in 
Washington. They look to the Government for help 
to enable them to carry on their losing business. 
They are pauper industries. For years past all that 
any one had to do in the United States was to start 
a new and losing manufacture — a pauper industry 
— and then to go to Congress for protection enough 
to make it become profitable. If he had influence 
enough he got the needed protection. What other- 
wise would have been his losses now became made 
up to him by the special privilege of exacting tribute 
from other Americans using his products. 



CHAPTER VIII 

PROTECTION (Continued) 
PROTECTION LEADS TO POLITICAL CORRUPTION 

TDOTH our great political parties have been in 
■* h * the habit of receiving contributions from the 
trusts and others conducting great protected indus- 
tries. That enormous contributions made are unso- 
licited does not help matters. Are millions given 
away for nothing to political managers, with no ex- 
pectation of anything in return? It is a well estab- 
lished fact that the same business interests contribute 
large sums to both parties in the same campaign, so 
that, whichever wins, they will have secured friends 
in Congress. Even if the free traders (meaning 
always those who stand for a tariff for revenue 
only) are in the majority and can control legislation 
if all remain true to their principles, there have 
always been enough renegades among them who, by 
joining the protectionists, can defeat proposed tariff 
reform and secure favors for the industries in their 
own districts. Witness the actions of Senators Gor- 
man and Brice. They were elected as Democratic 
tariff reformers, but they forsook their principles 
and so impaired the Wilson tariff reform bill, with 

118 



Protection 119 



the aid of Republican protectionists, that it became 
law without the President's signature. Cleveland 
stigmatized it as "a measure of party perfidy and 
party dishonor; " and the Republican Speaker, Reed, 
disgusted with the trading going on, spoke of it 
as " a complete abandonment of the fundamental 
principles of tariff reform." 

The House passed the Mills tariff reform bill of 
1888, but the Senate was then Republican and pro- 
tectionist, and, in spite of the expressed will of the 
people, the bill was turned into a protectionist 
measure. 

To add to the complexity of the situation, there is 
sometimes an understanding that certain Democrats 
who are protectionists at heart shall be returned to 
Congress by the aid of Republican votes. In return 
for the support of these men as members of the 
House, certain favors are given to them. It was 
thus that Randall, who was a Democrat, was elected 
again and again to Congress from a Republican dis- 
trict in Pennsylvania, by Republican votes. Although 
nominally representing Democratic principles, he 
could always be depended upon to vote with Repub- 
lican protectionists for any proposed new protective 
extortion. 

Then there are always Democratic tariff reform 
men to be found in Congress who shout for a tariff 
for revenue only (which is free trade, I must insist) 
until a schedule is reached that touches some industry 



120 Free Trade vs. Protection 

in their own district — and they vote for protection 
on that particular item. The classic instance is that 
of a member of Parliament from a borough where 
fishing was the principal business. He was in favor 
of free trade in everything except in herrings ! 

In one way or another protected industries are 
given to understand, every time a new tariff bill is 
to be framed, that they have grown rich under pro- 
tection ; that a contribution is expected ; that another 
increase in tariff rates will bring it all back to them 
again, so "down with the cash." If this is thought 
to be too plain English, read what a president of a 
political league wrote in 1888: 

The manufacturers of Pennsylvania, who are 
more highly protected than anyone else and who 
make large fortunes each year when times are pros- 
perous, are not giving as they ought to. If I had 
my way about it, I would put the manufacturers 
over the fire and fry all the fat out of them. 

The treasurer of the National Republican Com- 
mittee of 1888 wrote to his campaign workers in 
Indiana : " Divide the floaters into blocks of five 
and put a trusted man with necessary funds in charge 
of these five, and make them responsible that none 
get away and that all vote our ticket." 

When the great life insurance companies were 
found to be paying hundreds of thousands of dollars 
to campaign committees, of course it was to secure 



Protection 121 

protection — that is, special privileges — to the man- 
ufacturing, mining, and other industries whose 
shares of capital stock they owned in enormous 
amounts. 

In every one of our late campaigns, one or more 
of the more powerful United States Senators, know- 
ing where the big contributions come from, sees to 
it that due return in tariff and other favors is made. 

Henry L. Nelson, professor of Political Economy, 
writing in 1900, said that since 1875 Congress has 
but affirmed or ratified the decrees of the benefi- 
ciaries of the tariff. To these low depths the great 
Republican party, the party of high moral princi- 
ples, has fallen! And yet we continue to be told 
that the tariff must be reformed in the hands of its 
friends. As already said, we may as well expect to 
see the laws concerning arson reformed by a conven- 
tion of barn burners ! 

FRAUD PRACTICED TO PRESERVE PROTECTION 

In 1880 Indiana was carried by " bright, new, 
crisp, two-dollar bills" furnished by S. W. Dorsey, 
secretary of the National Republican Executive 
Committee. Mr. Arthur, soon to be inaugurated as 
Vice-President, said at a dinner at Delmonico's in 
1 881: " Indiana was really, I suppose, a Demo- 
cratic state. It had been put down in the books 
always as a state that might be carried by close and 



122 Free Trade vs. Protection 

perfect organization and a great deal of — " He 
hesitated and everybody laughed. He went on: U I 
see the reporters are present, therefore I will simply 
say that everybody showed a great deal of interest 
in the occasion, and distributed tracts and political 
documents all through the state." 

Then came "the monopoly dinner," " Belshaz- 
zar's Feast," as the newspapers called it, a million- 
aires' dinner, at which were represented all the 
various " special interests," not tariff interests only, 
but the Standard Oil Company, the great railroads 
and trusts, monopolies, and special privileges. 

HIGH PROTECTIVE LEGISLATION IS OBTAINED 
THROUGH "LOG-ROLLING" 

The fact is that no tariff legislation for protection 
purposes has ever been possible in the United States 
except through a compromise of interests. The 
various industries seeking protection have in every 
instance " pooled their issues " and met each other in 
a spirit of concession, ignoring the injury in order 
to secure the benefits coveted by each. There is no 
other way possible to spread the mantle of protec- 
tion over such diverse and antagonistic interests. 
To be successful, every tariff bill proposed for pro- 
tection purposes must favor a long list of industries 
and thereby control a majority of Congressional 
votes. The Morrill tariff is an excellent illustration 



Protection 123 

of this. After one of the seventeen successful bills 
for its revision had passed, Senator James W. Grimes 
of Iowa wrote as follows : 

" You may rely on what I say when I tell you there 
are not three men in the Senate whose honest con- 
victions were for the bill. They voted for it by a 
sort of coercion — one, because wool was in it; 
another, because iron was in it; another, because 
lumber was in it, etc.; but all condemning it as an 
entirety." Evidence of this kind is abundant on 
every hand. Merit in a tariff bill is not the thing 
that wins. Its success hinges on such an adroit rec- 
ognition of interests and such a skillful balancing of 
favors as to coerce a majority of the votes. It may 
not be considered a crime in Congressmen that they 
should vote for a hundred harmful features of a bill, 
since there is no other possible way to secure the one 
great benefit which their constituents demand. But 
the inquiry may well arise in the mind of every 
American voter : Is it possible that a system which 
always and of necessity compels practices of such 
questionable propriety can lie within the scope of 
honest and beneficial legislation ? * 

President Garfield told the political economist, 
Professor Perry, that, while he was a member of 
the Committee of Ways and Means in Congress, 
"the individuals and delegations who came before 
the committee to get new duties put on or old ones 
* Edward Taylor, Is Protection a Benefit? p. 54. 



124 Free Trade vs. Protection 

raised, came with the basest selfishness, and without 
a thought or a care but for the extra price of their 
products/' As Taylor says : * 

It may be historically demonstrated that there 
never has been a tariff bill enacted by the American 
Congress for purposes of protection that was not 
shaped, manipulated, and passed under the clamorous 
dictation of the very men who expected to reap 
profit by getting an artificial price for their goods 
at the expense of all the rest of their countrymen. 

FURTHER ILLUSTRATION OF PROTECTION FRAUDU- 
LENTLY OBTAINED 

In 1867, and afterwards, the Pacific Mail Steam- 
ship Company secured subsidies from Congress 
amounting to millions of dollars. In 1874 it was 
shown that the president of this company, with the 
knowledge of its directors, spent nearly a million 
dollars among members of Congress and others, to 
secure subsidies. One member of the House was 
found to have received three hundred thousand 
dollars. Through failure of memory he could give 
no account of what he had done with it. Circum- 
stances pointed to its distribution among members 
of Congress. The name of a hitherto honored Vice- 
President of the United States was brought into 
connection with this scandal, and he disappeared 
from public life. 
*Is Protection a Benefit? p. 51. 



Protection 125 



GOVERNMENT RECEIPTS VS. COST TO CONSUMER 

The amount actually received by the Government 
for duties is but a small part of the extra cost to 
consumers of the home article, caused by the tariff. 
Whatever may be the sum paid into the treasury of 
the United States through protective duties so high 
that they limit importation (and unless they do this 
they do not protect), they are many times, perhaps 
twenty fold, exceeded in the case of foreign goods 
shut out by high duties, by the extra price imposed 
upon the American consumers. The higher the pro- 
tective duty, the less the revenue it yields to the 
United States and the greater the extra cost above 
the cost of production it imposes upon the American 
consumer of the American substitute** Another and 
unexpected consequence follows; the fostering of a 
foreign market for these home-protected products, 
at lower prices than the home prices to Americans, 
and the greater the protection the greater is the dif- 
ference in price for the same American goods at 
home and abroad. The greater the profit made 
out of the American purchasers, the lower the maker 
can sell such articles abroad. Sometimes, as in the 
case of American watches, this difference is so great 
that they can be bought abroad by some enterprising 
American, brought back to this country and then sold 
here at a profit, for less than the makers' price here 
for the same watch (there being no duty on re-im- 



126 Free Trade vs. Protection 

ported American products). This so stirs the wrath 
and indignation of high protection Congressmen that 
they are almost beside themselves when they talk 
on the subject, and they resort to abuse of the re- 
importer, calling him all the bad names they can 
think of. That this is no exaggeration will be ad- 
mitted upon reading the debate in Congress on this 
subject. 

During the year 19 12, American watches being 
for sale in England at much lower prices than in 
the United States, an enterprising firm saw an op- 
portunity to make money by buying these watches 
in London, bringing them back to the United States 
and selling them below the price of the makers for 
the same grade of watches here. But the American 
makers saw that this would prevent their selling the 
same grade of watches at their usual high price, so 
they sold their stock in London with the stipulation 
that it should be shipped to Egypt. They even went 
so far as to have their agent oversee the actual 
shipment to Egypt. But the purchaser outwitted 
them, for, upon receipt of these watches in Egypt, 
they were immediately shipped to New York and 
sold there. Even with the cost of freight to Egypt 
and from Egypt to New York added, although sold 
below the maker's price in New York for the same 
grade of watches, the enterprising purchaser real- 
ized a profit on the transaction. But protectionists 



Protection 127 



still maintain that American products are not sold 
cheaper abroad than here where they are made ! 
Stanwood says:* 

The distribution of the price of merchandise makes 
no difference to the purchaser after the money passes 
from his hands. It neither injures nor benefits him 
if the amount of a duty assessed upon the pocket- 
knife which he buys goes to the treasury or to the 
cutler. All he cares for, unless he be greatly inter- 
ested in the tariff question, is whether the knife is 
cheap or dear. 

I submit that this is misleading and unfair. The 
cheapness or dearness of the knife depends entirely 
upon whether a one dollar knife is sold for two 
dollars in order that there may be a dollar either 
for the treasury or the cutler. Does it make no 
difference to the purchaser that he pays two dollars 
for a one dollar knife in order that there may be 
a rake-off of a dollar to go somewhere else ! 

The fact is that our manufacturing and other in- 
dustries have become so successful, rich, and power- 
ful that they have passed the point of supplying our 
own people only, and they must have the outlet fur- 
nished by the markets of other countries. But to 
sell at one price in the United States and at another 
price in Europe will not do. Remove gradually the 

* American Tariff Controversies in the Nineteenth Century, 
p. 301. 






128 Free Trade vs. Protection 

protective features of our tariff and Americans will 
be treated as well as foreigners, that is, with the 
same prices. Gladstone told an English audience: 

As long as Americans adhere to the protective 
system, your commercial primacy is secure. Noth- 
ing in the world can wrest it from you while America 
continues to fetter her own strong hands and arms 
and with these fettered arms is content to compete 
with you who are free, in neutral markets. 

PROTECTION MASQUERADES UNDER A FALSE NAME 

Every tariff act of our Congress intended to pro- 
tect home manufacturing by keeping out foreign 
goods by duties high enough to cut off or to limit 
importations, begins with a false pretense in the 
title: u An Act to Increase the Revenues of the 
United States . . ." If the expressed object were 
the real object, it has only been necessary to lower 
the rates at any time during the last forty years, 
and the increased imports at such lower rates would 
have yielded more revenue. No protectionist has 
ever dared to introduce a protective tariff bill into 
Congress entitled "An Act to Afford Protection to 
Certain Industries. " There has always been a well- 
founded, lingering fear that such a law would be de- 
clared unconstitutional by the Supreme Court of the 
United States. The arguments to the contrary are 
not convincing. 



Protection 129 



Judge Cooley says:* 

Constitutionally, a tax can have no other basis 
than the raising of revenue for public purposes, and 
whatever government has not this basis is tyrannical 
and unlawful. A tax on imports, therefore, the pur- 
pose of which is not to raise revenue, but to dis- 
courage and indirectly to prohibit some particular 
import, for the benefit of some home manufacturer, 
may well be questioned as being merely colorable 
and therefore not warranted by constitutional prin- 
ciples. As it is a duty from which revenue may be 
derived, the judicial power, where the motive of lay- 
ing does not appear on the face of the act, cannot 
condemn it as being unconstitutional ; but it is none 
the less a violation of the Constitution by the legis- 
lator who knows its object and levies the duty from a 
motive not justified by the Constitution. 

PROTECTION IS DENIAL OF THE RIGHT TO LIBERTY 
OF TRADE 

Protection says : " You shall not buy in the market 
you want to buy in, unless you pay a tax imposed to 
prevent your buying in that market." This is a 
denial of the right of every American to buy and 
to sell where he may want to. It was left to pro- 
tectionists to discover that it is economic w T isdom to 
interfere with, to hinder and to prevent, by law, 

* Quoted by Rep. Bartlett of Georgia in a speech in Congress, 
Jan. 26, 1912, Congressional Record, p. 9331. 



130 Free Trade vs. Protection 

trade between the inhabitants of two or more 
countries that is profitable to them all. John Bright 
said: 

Protection has upon it a taint of the great wrong 
of slavery. It does not steal the laborer, but it steals 
his labor, it taxes it cruelly, it lessens its results and 
its profit, and turns it into channels less useful to the 
laborer. 

Free trade (that is, a tariff for revenue only) has 
no such results, does none of these things, yet brings 
in the necessary revenue to the government without 
interfering with commerce. 

PROTECTION IS INCOMPATIBLE WITH A TARIFF FOR 
REVENUE 

Protectionism advocates the imposition of taxes 
on imports for other purposes than the production 
of revenue, on the ground that incidental advantages 
will result. Yet it claims that the protective tariff 
yields a revenue, forgetting that the protection 
sought is secured only to the extent to which for- 
eign commodities are kept out by high duties, while 
revenue to the Government is secured only to the 
extent to which low duties encourage the letting 
them in. 



Protection 131 



A DIMINUTION OF TARIFF RATES WILL INCREASE 
THE REVENUE THEREFROM 

If by a reduction of tariff rates it be reckoned that 
receipts will be diminished $75,000,000 or more, it 
must be remembered that lowered rates will cause 
an increase in imports and consequent increase in 
tariff duties receipts that will in part, and may en- 
tirely, prevent this diminution in receipts. 

We see, therefore, that a protective tariff is not 
adopted for the purpose of yielding a revenue to the 
Government. It is adopted and maintained for the 
benefit of the pauper manufacturers of this country, 
who cannot carry on business without this power to 
tax all the consumers of their products in this country 
to keep their unprofitable businesses alive. 

PROTECTION IS A SYSTEM OF UNENLIGHTENED 
SELFISHNESS 

It is an attempt so to arrange business that all 
the profit may be made by Americans and all the loss 
may be met by the foreigners with whom we deal. 
This results from ignorance or neglect of the fact 
that in commerce both profit by the exchange or it 
would not be made, for it is voluntary, not com- 
pulsory. If interfered with by an artificial law (pro- 
tection), commerce will be impeded. In the minds 



132 Free Trade vs. Protection 

of many protectionists, what is really meant by pro- 
tection is protection of my industry, not of yours, 
unless I must consent to protect yours in order to 
gain your consent to protect mine. The very object 
of protection is to confer a special privilege on 
somebody or somebodies. Protection and special 
privilege mean the same thing. Both are undemo- 
cratic and un-American. 

PROTECTION CONSULTS THE INTERESTS OF THE FEW 

It is but natural that those who are enjoying a 
special privilege (protection) should maintain vig- 
orously and believe sincerely that the system that 
enables them to prosper is the best system possible. 
Therefore they support the system that consults the 
interests of the few, comparatively, at the expense 
of the many, that is, the whole body of the consumers 
in the United States. 



CHAPTER IX 

PROTECTION (Continued) 

PROTECTION, A SPECIAL PRIVILEGE TO A FEW, CAN- 
NOT BENEFIT THE MANY 

TT IS a fundamental error of protectionists to 
■*■ suppose that all the inhabitants of a country can 
be benefited by granting to a few of them the spe- 
cial tribute of exacting a tribute from all. This is 
equivalent to holding that, although no one can lift 
himself by his boot straps, yet, if we grant the privi- 
lege to a few of exacting help from others in the 
attempt, it can be done if all pull together. 

Protectionists forget that all the inhabitants of a 
country are supported by all the inhabitants of the 
country. They think that, by a cunning device they 
call protection, they can cast part of this burden of 
supporting all the inhabitants of a country upon the 
inhabitants of another country. It cannot be done. 
Even if it could, and all countries adopted it, we 
should only be in the condition of the row of mon- 
keys in cages in a menagerie, each one of whom 
neglects his own food to reach around into the next 
cage to get his neighbor's food. When the cages 
are in a circle, as nations are, no one gains by this 
manoeuvre. 

133 



134 Free Trade vs. Protection 

PROTECTIVE DUTIES BENEFIT THE FEW AT THE 
EXPENSE OF THE MANY 

Protective duties are the tributes or tolls the Gov- 
ernment forces all consumers to pay by law into the 
treasuries of the protected manufacturers. It is 
" prize money," the division of part of which is 
quarreled over through strikes. But the real ques- 
tion that concerns the great body of consumers, the 
American people, that pay these tributes or tolls, is, 
how does it benefit all Americans to tax all Ameri- 
cans for the benefit of a part of all Americans who 
are, comparatively speaking, only a few? Of course 
it benefits all the Americans who are thus enabled 
to put some of the money of all Americans into 
their own pockets, but how does that benefit Ameri- 
cans generally? Of course it benefits bank robbers 
to rob banks and put the money into their own 
pockets, and it would greatly facilitate this opera- 
tion if a law protected them in so doing, but how 
would that benefit all banks as a class? Of course, 
as before stated, it benefits pickpockets to pick 
pockets, especially if a law protects them in doing so, 
but how does that benefit all those whose pockets 
are picked? 

PROTECTION IMPOSES A BURDEN ON EVERY 
CONSUMER 

Protective taxes prevent every man's income from 
going as far as it would were there no such tax. He 



Protection 135 



must go without or buy less of what is enhanced in 
price by the tax that brings in little or no revenue to 
the government, but, nevertheless, levies a tribute on 
everyone to benefit the few in the protected industry. 
It does not help matters that all the producers in all 
the protected industries are thus mulcting all the con- 
sumers. It makes matters worse; for, if all the con- 
sumers pay a higher price for everything, those 
among them who are workingmen must either have 
higher wages or must get along with less of the 
necessities of life, or must give up the attempt to lay 
by something for their old age. We ignore the very 
evident economic truth that all the inhabitants of this 
country must be supported by all its inhabitants. The 
true, democratic, American way is to allow everyone 
to support himself and his own family without de- 
pending on government aid. Yet protectionists would 
have it that if we all tax each other we shall all grow 
richer. Is not this magic? We must remember that 
the more effective the protection, the less it yields the 
government, and the greater the cost to all the 
consumers. 

PROTECTIVE TARIFFS RAISE PRICES 

While American protectionists deny that protect- 
ive tariffs increase prices, some of them admit that 
such tariffs have that effect in other countries. Thus, 
an American consul in Austria, a country with a high 



136 Free Trade vs. Protection 

tariff, writing on the increase of prices there to the 
Committee on Ways and Means of our Congress, 
said: 

Tariffs have distinctly raised prices. The pro- 
tected Austrian producers take the entire benefit 
of the tariff, keeping their prices at as high a figure 
as possible without permitting importation. 

Is any American voter green enough to think that 
protected American manufacturers do not follow the 
same course? 

Admitting that protective tariffs raise prices, some 
protectionists claim that prices have gone up every- 
where, in free trade England as well as in protective 
France, Germany, and other protected countries. 
They ignore the fact that prices have gone up less 
in England (because open to buy everything where 
its people can find the lowest prices) than in any 
country that is under a protective system. 

AMERICAN MEAT IS CHEAPER IN ENGLAND THAN IN 
THE UNITED STATES 



In August, 19 1 2, American sirloin of beef sold in 
London for nineteen and one-half cents a pound, 
while it was selling in New York for twenty-eight 
cents. During the first eight months of 19 12 over 
three million dollars' worth of cattle, sheep, and hogs 
were thus exported from the United States, in spite 



Protection 137 



of the fact that the price was so much less in London 
than in New York. The explanation is that prices 
are kept up in the United States by the great beef 
packers, while foreign meat at lower prices is kep^ / 
out by the tariff. What the beef packers cannot sell 
here at their own high prices is exported and sold in 
London subject to world competition, the prices 
being determined by the competition of South Amer- 
ica, Canada, and Australia. The English get their 
meat cheaper than we do because they maintain a 
market open to the competition of the world. If the 
great American beef packers are able to form a 
trust that will control the meat supply of these other 
countries, they may succeed in screwing up the prices 
of meat in England and elsewhere to the same point 
they keep them at in the United States. 

PROTECTION IS THE GRANT OF SPECIAL PRIVILEGE 

Under protection all consumers pay a tax, toll, 
tribute, or "prize money," call it what you will, to a 
few of their own number, to enable these few to 
carry on some business, some pauper industry, that 
otherwise they could not carry on profitably. This 
does not create wealth nor effect economy in the use 
of existing wealth. It only diverts capital into new 
channels at the expense of all. If protection creates 
wealth, all we need do is to stop all importation by 
an absolutely prohibitory duty and make it a criminal 



138 Free Trade vs. Protection 

offense, punishable, if necessary, by death, to bring 
any foreign manufactured article into this country. 
This would enable American manufacturers to raise 
prices to the point of the cost of the imported article 
with the duty added, and even beyond it — and 
straightway we should all become rich beyond the 
dreams of avarice. This would enable manufac- 
turers to pay many times as much for wages as they 
pay now, according to protectionists. But as a mat- 
ter of practical life we know well enough that even 
then the price of wages would be determined by the 
law of supply and demand, and manufacturers would 
continue to pay the going rate of wages, while obtain- 
ing an artificial high price for their products through 
the special privileges conferred upon them by protec- 
tion. 

If you are a protectionist you may say this is non- 
sense, but listen to what Horace Greeley wrote to 
Garfield: 

If I had my way, if I were king of this country, 
I would put a duty of one hundred dollars a ton on 
pig-iron, and a proportionate duty on everything else 
that can be produced in America. The result would 
be that our people would be obliged to supply their 
own wants, manufactures would spring up, compe- 
tition would finally reduce prices, and we should live 
wholly within ourselves. 

Henry C. Carey, an arch-apostle of protectionism, 



Protection 139 



wrote, " It would be better, commercially, for this 
country if the Atlantic Ocean were a sea of fire." 

No one then foresaw that under high protection, 
when fully and finally established, instead of any 
lowering of prices through competition, the result 
would be the elimination of competition through the 
formation of trusts, foreign competition being cut 
off by the tariff, and that American products would 
be sold cheaper abroad than at home. 

ALLIANCE OF COTTON AND WORSTED INTERESTS WITH 
POLITICS TO GET AND PRESERVE PROTECTION 

Miss Tarbell says:* 

The fact is that this great politico-industrial alli- 
ance of cotton and worsted has been the backbone 
of protection — not of protection as the country 
understood it, but of protection as Mr. Aldrich under- 
stood it. To Mr. Aldrich, protection never has been 
a set of principles to be applied with care and candor. 
It has always been a trading system. I think it is 
entirely fair to Mr. Aldrich to say that from his first 
connection with Congress he saw that the tariff, 
properly worked, was the surest road to power and 
to wealth that this country offered to a politician. 
He saw the trading possibilities in it, and he intelli- 
gently and persistently gave his great ability to 
developing them. The backbone of the system he 
worked out was this alliance between cotton and 

* The Tariff in Our Times, p. 326. 



140 Free Trade vs. Protection 

worsted. In that alliance he had a dependable block 
of votes with which he could carry to success almost 
any duty which would strengthen the party, oblige a 
friend, or help his own pocket. This block of votes 
was behind practically every increase and manipula- 
tion in the bill of 1909. To Mr. Aldrich's credit, 
let it be said that he has made as little pretence that 
he was not carrying on a traffic in duties as any man 
in the business. On the whole, he may be said to 
have been frank about it, especially in private. 

There are three high protectionists who have 
done more by their work on the tariff to foment 
socialism in its worst form than any three Socialists. 
These men are Aldrich, Lippitt, and MacColl. 

PROSPERITY IS NOT THE RESULT OF HIGH TARIFFS, 
NOR ARE PANICS THE RESULT OF LOW TARIFFS 

Upon examination of the claims made by protec- 
tionists that prosperity has resulted from tariffs im- 
posing high duties, and panics, depression, and ruin 
from tariffs even tending only towards free trade 
(meaning thereby tariffs for revenue only), and also 
of the sometimes extravagant counter-claims of free 
traders that prosperity has resulted from the adoption 
of free trade principles, an impartial investigator 
must come to the conclusion reached by Taussig, that 



Protection 141 



many of the assertions of protectionists now firmly 
imbedded in the minds of stand-pat Republicans are 
due to bad reasoning and ignorance, and are based 
upon the one-sided treatment of the subject by Henry 
C. Carey, the writer of many books making extrava- 
gant claims in favor of protection. No fair-minded 
person having even a superficial knowledge of the 
economic history of the period can long entertain 
Carey's notion that the crises of 1837 and 1839 were 
caused by the compromise tariff of 1833, or were 
in any way connected with it. These crises were due 
to many causes having nothing to do with the tariff, 
such as Jackson's financial mistakes, inflation of the 
currency by wild-cat banks, speculation and unduly 
expanded credits. By a similar process of bad rea- 
soning it is still repeatedly asserted in speeches, even 
in Congress, that the panic of 1893 was caused by 
the Gorman- Wilson tariff of 1894. By the same 
kind of reasoning Carey and his followers have 
claimed that the panic of 1857 was caused by the 
tariff act of 1857. This is an unwarrantable infer- 
ence, even though we admit that this act was passed 
seven months before the panic, instead of months 
afterwards, as was the case in 1 893-1 894. 

It was in anticipation of the panic of 1857 that the 
tariff act of that year was framed, and it was adopted 
with the hope that it would help to avert the fore- 
seen result. It failed to prevent it, but no one at 



142 Free Trade vs. Protection 

that time conceived the later peculiar protectionist 
idea of attributing the panic to the tariff. 
On this point Taussig says:* 

The tariff system of a country is but one of many 
factors entering into its general prosperity. Its influ- 
ence, good or bad, may be strengthened or may be 
counteracted by other causes ; while it is exceedingly 
difficult, generally impossible, to trace its separate 
effect. Least of all can its influence be traced in 
those variations of outward prosperity and depres- 
sion which are marked by " good times " and crises. 
A protective tariff may sometimes strengthen other 
causes which are bringing on a commercial crisis. 
Some such effect is very likely traceable to the tariff 
in the years before the crisis of 1873. It ma y some- 
times be the occasion of a revival of activity, when 
the other conditions are already favorable to such a 
revival. That may have been the case in 1843. But 
these are only incidental effects, and lie quite outside 
of the real problem as to the results of protection. 
As a rule, the tariff system of a country operates 
neither to cause nor to prevent crises. They are the 
results of conditions of exchange and production on 
which it can exercise no great or permanent influence. 
Remarks of the same kind may be made on the 
frequent assertion that the prosperity of the country 
from 1846 to i860 can be traced to the low duties 
then in force. He who is convinced, on grounds of 
general reasoning and of general experience, that the 

* Tariff History of the United States, p. 121. 



Protection 143 



principles of free trade are sound and that protective 
duties are harmful, can fairly deduce the conclusion 
that the low tariffs of 1846 and 1857 contributed, so 
far as they went, to general prosperity. But direct 
connection cannot be traced. A number of favor- 
able causes were at work, such as the general advance 
in the arts, the rapid growth of the railway system 
and of ocean communication, the California gold 
discoveries. There is no way of eliminating the 
other factors and determining how much can be 
ascribed to the tariff alone. 

Predictions of disaster, with organized calamity 
howling, have followed announcements of reduction 
in the tariff; but, with the good common sense charac- 
teristic of Americans, as soon as the election is over 
this all ends, the predictions remain unfulfilled, and 
they are soon forgotten. So are the past brilliant an- 
ticipations of protectionists at every upward revision 
of the tariff. Some of these predictions read strangely 
enough when read in the-light of knowledge of actual 
results. Thus, in 1849, Abbott Lawrence, a leading 
manufacturer in Massachusetts and a protectionist, 
anticipated, U A11 this [a general crash] will take 
place in the space of eighteen months from the time 
this experimental bill goes into operation; not a spe- 
cie-paying bank doing business will be found in the 
United States." Nathan Appleton, another great 
manufacturer, made a similar prediction in his Re- 
view of Walker's Report. Undeterred by the failure 



144 Free Trade vs. Protection 

of these predictions, protectionists still continue to 
make them, and they still continue to remain unful- 
filled. Lovers of their country were ashamed to see 
a President of the United States abusing his position 
by prognostications of woe in the fall of 19 12 in 
case his party should suffer defeat at the polls, and 
an honored ex-President of the United States pre- 
dicting that u the establishment of the Democratic 
principles of free trade, if adopted, will close the 
manufacturing establishments of the country and will 
bring on nation-wide disaster." No political party 
is the sole repository of economic truth, administra- 
tive ability, and patriotism. Half of the voters of 
the country are not proposing to ruin it. 

EVEN PROTECTIONISTS ARE NOT SATISFIED WITH THE 

TARIFF 

In a speech on the tariff before the United States 
Senate by Senator Bacon, May 7, 1909, he quoted 
from an interview with H. E. Miles, chairman of 
the tariff committee of the Manufacturers' Associa- 
tion and president of the National Association of 
Agricultural Implement and Vehicle Manufacturers, 
and a Republican, in which Miles said: 

The annual output of the manufacturers of the 
United States, as shown in the last census, is valued 
at $14,800,000,000. The tariff which covers the 



Protection 145 



prices (of these manufactures) is inexact, antiquated, 
and inapplicable at the present time. Scarcely a 
single schedule has any honest and direct application 
at this time to the principle of protection. Under 
present conditions the tariff is not a protective tariff 
in any sense. It is a tariff of graft and discrimina- 
tion, hurtful in a thousand ways. From one-half to 
two-thirds of the stuff made under this tariff bears 
to the consumer an unjust and unreasonable price 
because of the tariff. It is estimated by competent 
authorities that the graft, overcharge, and wrong 
done the American public because of the present 
tariff reaches $3,000,000 in a working-day. We have 
the facts, schedule by schedule, and are prepared to 
make the details public, should we receive opposition 
to our demand for a permanent tariff commission, 
through the appointment of which a proper adjust- 
ment of the tariff can be procured. We are not 
agitators or reformers. We are mostly Republicans 
and all protectionists. 

In the course of the colloquy that followed Sen- 
ator Aldrich asked Senator Bacon, " How much does 
it cost the American people to maintain the protect- 
ive tariff?" Senator Bacon answered that it is vari- 
ously estimated by different people, by some as low 
as five times, and by others as high as ten times, the 
amount realized from the protective tariff at the 
custom house. Taking seven as a conservative esti- 
mate, the Senator said it would be two billion dollars 
a year taken out of the pockets of the consumers of 



146 Free Trade vs. Protection 

the country in the increased cost of articles, which 
increased prices go into the coffers of the producers 
in whose interest the protective tariff is made. 

PROTECTION IS AN ARTIFICIAL STIMULUS DRAWING 
CAPITAL FROM PROFITABLE INTO UNPROFIT- 
ABLE INDUSTRY 

Adam Smith pointed out long ago that it is waste- 
ful for a government to undertake to divert capital 
from one industry into some other. The industries 
already existing have the capital employed in them 
that their wants require; or, if not, more capital will 
soon flow into them, tempted by the evident profit 
whenever the demand is greater than the supply. 
But when, by an artificial stimulus (protection) cap- 
ital is called for to carry on the protected industry, 
it must be withdrawn from some industry already 
established, causing a rise in the rate of interest. 
Protection is the artificial stimulus that thus draws 
capital from some established business into another 
industry, feeding the new industry with pap drawn 
from the consumers in the higher prices they must 
henceforth pay to the manufacturer. One of the 
objects of protectionists, according to its advocates, 
is the diversion of a part of the capital and labor of 
the country out of the channels in which they would 
otherwise flow, with profit, into new industries they 
would not otherwise flow into, because unprofitable. 



Protection 147 



This diversion is brought about through the coercive 
power upon capital of the artificial profit held out by 
the government to capital to undertake what other- 
wise it would not undertake. 

It is evident, too, that the new, protected industry 
must offer more profit than the old, unprotected 
industry, else capital would not be tempted to make 
the change. As Professor Sumner says: * 

People would need no coercion to go into a new 
industry which had a natural origin in new industrial 
power or opportunity. No coercion is necessary to 
make men buy dollars at ninety-eight cents apiece. 
The case of coercion is when it is desirable to make 
them buy dollars at one hundred and one cents 
apiece. Here the statesman with his taxing power 
is needed and can do something. What? He can 
say : " If you will buy a dollar at one hundred and 
one cents, I can and will tax John, over there, two 
cents for your benefit ; one to make up your loss, 
and the other to give you a profit/' This is protec- 
tion, falsely called " The American System." 

But the real American system is one giving equal 
freedom and opportunity to all, without restraint, 
coercion, favor, subsidy, special privilege, monopoly, 
prize money, or interference by the government. 
Protection obliges all consumers — that is, every- 
body — to pay a premium to the few protected pro- 
ducers (for, compared with the consumers, they are 
* Protectionism, p. 44. 



148 Free Trade vs. Protection 

few) who are carrying on otherwise unprofitable 
industries. It is a special privilege conferred by law 
upon certain producers to enable them to mulct all 
consumers enough to carry on with profit pauper 
industries they would not otherwise engage in. 

PROTECTED INDUSTRIES ARE A DRAG UPON THE 
WHOLE COUNTRY 

Taking protected industries at their own word, 
they are carrying on their business at a loss but for 
protection, for they tell us that without this special 
privilege of taxing the consumers of their wares they 
cannot carry on business, but must shut up their 
shops and mills. That is to say, the reason they do 
not carry on their business at a loss is because what 
otherwise would be loss is made up to them by con- 
sumers in the extra price government favor (through 
the tariff) enables them to obtain. In other words, 
protected industries, like insane asylums, poorhouses, 
reformatories, and prisons, are maintained by the 
rest of the community out of the profits they derive 
from unprotected and unprivileged industries. They 
are parasites, pauper industries living on the profits 
of the rest of the country. The more of them there 
are and the bigger they are, the worse it is for the 
rest of us. We should all be better off without them. 
Protection is, therefore, a drag upon the develop- 
ment of the country. 



CHAPTER X 

PROTECTION (Continued) 

PROTECTIONISM CLAIMS IT WOULD INJURE US TO 
OBTAIN SUGAR CHEAP OR WITHOUT COST 

IN 1902, ostensibly upon the ground that beet 
«*■ sugar was cheap in Russia because of a bounty, 
but in reality in the interest of the Sugar Trust, Con- 
gress levied what it called a countervailing duty on 
Russian beet sugar to prevent competition with 
American labor employed in raising sugar cane and 
beets and in making sugar. One of the frequent 
results of protective legislation is that it gives rise 
to hostile legislation in reply. So in this case 
the Russian government retaliated by raising her 
duties on American exports of metals and their 
wares. One not obsessed by the hallucinations 
of protection might think it would be a good 
thing for us Americans if we could buy sugar 
at a low price. But protectionists know better 
than that; they know that it is the interests of 
the sugar producers that must be consulted, not 
that of the sugar consumers. Therefore, if the 
heavens should rain sugar, as they are supposed to 
have rained manna of old, so we could all have 

149 



150 Free Trade vs. Protection 

sugar for nothing, absolutely free of cost, we must 
all pray to God to stop the supply, that cost nothing, 
because it would interfere with American labor and 
capital engaged in raising sugar cane and beets and 
in making sugar I 

BOUNTIES ARE UNCONSTITUTIONAL 

Article I, section 8, of the Constitution of the 
United States provides that Congress shall have 
power to levy and collect taxes, duties, imposts, and 
excises to pay the debts and provide for the common 
defense and general welfare of the United States, 
but all duties, imposts, and excises shall be uniform 
throughout the United States. The purposes for 
which money raised by taxation can be used is, there- 
fore, expressly limited to payment of the debts and 
to provide for the common defense and general wel- 
fare. This must be for a public purpose; or, as 
defined by Richard Olney, " It is the power to raise 
money from the public for the public." If the gen- 
eral welfare is subserved by a bounty on sugar (cane, 
sorghum, beet, maple, etc.), it can be subserved by 
a bounty on anything, and there will be no limit to 
giving away the public money. As Mills said, during 
the debate in 1890, why should not the people who 
are raising corn, cotton, wheat, oats, hogs, beeves, 
all slip up to the counter and say, "We will take 
sugar in ours, too?" 



Protection 151 



PROTECTION IS INCORRECTLY CALLED 'THE AMER- 
ICAN system" 

Henry Clay was a brilliant, able, but not well- 
educated man, with but little knowledge of political 
economy. He was brought up in a community with 
but little opportunity to study it, and the subject itself 
was as yet almost unknown. He cast a glamour over 
protection by calling it "the American system, " and 
he may have invented the term. But that even then 
this designation was known to be incorrect, note 
what Webster said, " I am a little curious to know 
with what propriety of speech this imitation of other 
nations is denominated as an i American* policy; 
while, on the contrary, a preference of our own 
established system as it now actually exists, and has 
always existed, is called a foreign policy." In 1820 
he said, in a speech delivered in Faneuil Hall, that 
our protective tariff system was " a policy that no 
nation had entered upon or pursued without having 
found it to be a policy that could not be followed 
without great national injury, nor abandoned without 
extensive individual ruin." This was the reason he 
came at last to support protection when once unfor- 
tunately established. But he did not call it "the 
American system," because he knew that other 
nations had tried it for centuries, and, therefore, 
there was nothing "American" about it. 



152 Free Trade vs. Protection 

PROTECTION BEGETS INEFFICIENCY, DETERIORATION 
IN QUALITY, AND DEPENDENCE ON GOV- 
ERNMENT FAVOR 

One of the bad results of protection concerning 
which protectionists say nothing, is the deterioration 
in the quality of home goods it brings about, and the 
indifference it begets about improved processes or 
improved machinery. The greater the protection, 
the poorer is the quality of the home manufacture, 
for the less is the dependence of the manufacturer 
upon the wants of the consumer. It is an insult to 
your kitchen to buy the miserable stuff made for it. 
The coal hod must be renewed every few months. 
The tin pans are hardly worth carrying home. The 
copper teakettle, and other copperware tinned over, 
no longer lasts as it used to, and is so thin it cannot 
be repaired. If you want a good tin roof, so called, 
you must buy foreign tin plate, high in price through 
the tariff. Ever since the u protection" of the tin 
plate industry of this country tin plate has deterio- 
rated in quality. Galvanized ironware rusts right 
out unless you buy the imported article, because the 
iron is so impure that, when wet, electrolysis causes 
its rapid oxidation. So poor is the tinware pipe for 
water spouts and conductors that it is not worth 
putting up, and it is necessary to use iron pipe, which 
is clumsy and heavy, or copper pipe, which is dear. 
Ordinary rubber goods are of wretched quality. 



Protection 153 



Overshoes are not to be compared with those made 
abroad that are kept out by the tariff. The manufac- 
ture of rubber goods is carried to such a degree of 
perfection (?) that it is said many so-called rubber 
goods contain ninety per cent dirt — or foreign ma- 
terial, to give it a better-sounding name. According 
to the evidence of men in the cutlery business, we 
have now been long enough under protection for the 
greater portion of the American public to have for- 
gotten what good cutlery is. If you want cotton 
cloth that will last you must buy it unbleached. So 
poor is some of the cloth made by our protected 
woolen mills that there has been an organized revolt 
against it by makers of clothing. Restore compe- 
tition by the gradual reduction of excessive duties and 
the quality of home-made goods will be improved. 

DETERIORATION IN QUALITY OF CLOTH 

If this be doubted, look at the evidence laid before 
Congress during the debates on the Payne-Aldrich 
bill of 1909. Representative Longworth read before 
the Committee on Ways and Means a letter from a 
manufacturer of clothing in his district in which the 
writer complained, U I never handled cloth of so 
inferior a quality as I do now. Laborers, mechanics, 
and farmers who use ready-made clothing are receiv- 
ing practically no value for their money." A com- 
mittee of the National Association of Clothiers pro- 
tested to Congress : 



154 Free Trade vs. Protection 

Standard winter worsteds, which twelve years ago 
ranged from twenty-one to twenty-four ounces in 
weight per yard, have gradually been decreased in 
weight, so that they now range from fourteen to 
sixteen ounces per yard: standard spring worsteds 
which ranged from fourteen to sixteen ounces in 
weight per yard have gradually been decreased, so 
that they now range from nine to twelve ounces per 
yard. In consequence, a deterioration of fully thirty- 
three and one-third per cent in weight has taken 
place, in addition to the establishment of a much 
higher range of prices for the same qualities of 
goods. The clothing manufacturer, therefore, through 
the inability of the cloth to stand ordinary wear, is 
largely deprived of the opportunity to produce gar- 
ments upon which a good reputation can be based. 

PROTECTION KEEPS OUT THE BETTER-MADE FOREIGN 

GOODS 

All this u is good for business," but is it good for 
the poor consumer, who sighs for the old times 
under free trade (if he is old enough to remember 
them), when, under a tariff for revenue only, he got 
money's worth for his money? It is useless for him 
to complain, for why should the manufacturer make 
better goods or wares? He knows that the protect- 
ive tariff keeps out the better-made foreign article. 
If, perchance, it does not, he goes to Washington 
and gets the tariff raised, if not honestly and directly, 



Protection 155 



then dishonestly and indirectly through some deadly 
11 joker," slipped through in return for a handsome 
campaign contribution or other equivalent. For, 
who cares for the consumers? Were they not made 
to be exploited in the holy cause of " business?" 

PROTECTION DIMINISHES COMMERCE 

Why do foreign products cross the ocean and 
enter our ports, and why do our products cross the 
ocean and enter foreign ports, in spite of the strenu- 
ous efforts of protectionists on both sides of the 
ocean to keep them out? It is because of our mutual 
wants. Europeans have something Americans want, 
and Americans have something Europeans want. 
Both profit by making the exchange and both have 
more profit left as addition to capital or for use for 
other purposes. The freer the exchange of their 
products, the greater the benefit to both the Amer- 
icans and the Europeans concerned. The only lim- 
itation upon absolute freedom of exchange is the 
admitted necessity of raising a revenue to meet the 
expenses of government through the imposition of 
custom-house duties. The more stringent the pro- 
tective tariffs of the governments of these different 
countries become, the greater is the injury done to 
the inhabitants thereof, and the smaller is the 
revenue derived therefrom. 



156 Free Trade vs. Protection 

PROTECTION HAS FOSTERED UNEQUAL DISTRIBUTION 
OF WEALTH 

Protection has brought about, on one hand, the 
bloated Pittsburgh millionaires, and, on the other 
hand, the twelve-hour day, two shifts of twelve hours 
each, Sunday work, increased child labor, cruel 
speeding, and cheerless, insanitary homes and sur- 
roundings. Such is the work of " protection," 
secured by manufacturers through political alliances 
and United States Congresses steeped in the fallacies 
of protection, while cunningly claiming they are 
working for the benefit of American laborers. They 
use them as the cat's paw to draw chestnuts out of 
the fire for themselves. But the Lawrence strike 
and the train of subsequent events connected with it, 
even yet not ended, are opening everyone's eyes. We 
see the most highly protected industries employing 
their help at rates fixed by the competition of the 
world, while selling their goods at such prices as the 
tariff enables them to charge and yet just keeping 
out imported goods or restricting almost entirely 
their importation. The whole country is awakening 
to realization of the fact that a gradual reduction of 
the tariff to a revenue basis (which is free trade) 
will benefit everyone. 

PROTECTION DOES NOT RESULT IN CHEAPNESS 

In the celebrated Report on Manufactures to Con- 
gress by Hamilton as Secretary of the Treasury in 



Protection 157 



1791 he admitted that " as often as a duty upon a 
foreign article makes an addition to its price it causes 
an extra expense to the community for the benefit of 
the domestic manufacturer." He argued that it is 
for the interest of society to submit to this temporary 
expense on account of the eventual cheapness that 
would ultimately result. The trouble is that "the 
eventual cheapness n that is to result from protection 
never comes. The same argument was used in or 
about 1864, when protection began to be talked 
about again. We were told that it was to be tempo- 
rary and moderate. After half a century no one 
hears anything more about the temporary character 
of protection. Instead of being moderate, protec- 
tion has become immoderate, ever asking for more 
and more. As to the cheapness to be brought about 
by protection, where is it? The United States has 
become the dearest country in the world to live in. 

PROTECTION DOES NOT CAUSE PROSPERITY 

It is a common thing for protectionists to cite 
census figures showing the increase in wealth of our 
country and then to say that it is due to protection. 
But this is what they are to prove, and they forget 
that in order to prove it they must prove how much 
the country would have increased in wealth under 
free trade (meaning a tariff for revenue only). 
There is one important fact bearing on this subject, 



158 Free Trade vs. Protection 

the fact that in no period under protection has this 
country prospered so greatly as it did during the 
period from about 1840 to i860, in which the coun- 
try was the nearest to being under free trade. Of 
course, I do not mean that during that period we 
increased more in wealth than during any later 
period, for the population was much less and we had 
not yet accumulated great surplus wealth; but, pro- 
portionately, that was the period of the greatest 
prosperity the country ever saw. I will not repeat 
the bad mistake in logic made by protectionists, and 
claim that it was all due to free trade, but doubtless 
the lower duties then prevailing were one of the 
many causes that will account for the unexampled 
prosperity of that period. 

PROTECTIONISTS CLAIM THAT A PROTECTIVE TARIFF 
INCREASES WEALTH 

I quote from that protectionist authority, Stan- 
wood: 

It is not suggested that the object of a protective 
tariff is to encourage importations — rather, the con- 
trary is true ; but that the general effect is to increase 
and to diffuse wealth, and thus to create conditions 
that lead to larger importations. 

If protection increases wealth, it is magic ! All we 



Protection 159 



have to do is to tax ourselves out of all we have 
by heavier duties on everything — and we shall all 
become immensely rich! 

PROTECTION IS AN APPEAL TO SELFISHNESS 

It rests on false reasoning, misapplication of 
facts, and claims based on bad reasoning. It is 
arrogant, full of pretence, ever taking refuge in some 
new sophism as it is obliged to abandon each old one 
as men become convinced of its nature. It is a snare 
and a delusion; a fraud, because it is a system of 
legalized, organized robbery of the many for the 
benefit of the few. If any think this language is too 
strong, let them study the history of tariff legislation 
in Washington during the last thirty to forty years 
and let them find out for themselves how the will of 
the people to obtain tariff reform (meaning thereby 
tariff reduction) has been frustrated by chicanery 
and deceit, disregard of the welfare of the great 
body of the consumers by incompetent, unreliable 
Congressmen who have carried their readiness to 
serve the great business interests so far that when 
Lewis D. Brandeis was asked whom he represented, 
at a public hearing on the tariff, and he replied that 
he appeared for the consumers, the members of the 
committee laughed, the idea seemed so preposterous 
to them that anyone should represent the consumers. 



160 Free Trade vs. Protection 

PROTECTION IS ALWAYS CLAMORING FOR MORE 
PROTECTION 

Despite the modest claims of protectionists after 
the Civil War that protection was to be temporary 
and moderate and would soon bring lower prices, as 
fast as new industries should become well estab- 
lished, ever since then they have been ever clamoring 
for more and more protection. There has always 
been some excellent reason why protection should 
be continued and should also be increased, through 
some skillful change in the tariff or the quiet intro- 
duction of a " joker." There has always been some 
reason advanced to extend the sphere of protection 
so as to include something that before then no one 
ever claimed needed protection, even upon any prin- 
ciple of the protectionists. And, instead of taking 
steps to improve their processes and to increase the 
efficiency of their plants, the protected industries rely 
upon still more protection and make their inefficiency 
the excuse for more protection. Protectionists of the 
present period forget that protectionists from i860 
to 1870, and later, asked only for temporary and 
moderate protection. Where is the protectionist to 
be found now who would subscribe to such a theory 
of protection ? Grown into giants by what they have 
been fed on, many protectionists now call for " pro- 
tection for protection's sake," irrespective of any 
question of revenue. 



Protection 161 



PROTECTION DOES NOT COVER ALL INDUSTRIES 

In many industries, from the very nature of the 
case, protection cannot be applied. This is true 
where the product is bulky, making the freight across 
the ocean an important element in the cost, and this 
applies particularly to those cases where the value 
of the article is low when compared with its bulk. 
In other cases the monopoly for a limited time 
resulting from the grant of a patent or the superior 
ingenuity of the American inventor and mechanic 
tends to protection against importation. Thus, in 
making boots and shoes, woodenwares, wagons, 
carts, agricultural tools and machines, railroad and 
street railroad cars, the cheaper wallpapers, pianos, 
telephones, etc., we succeed without protection. Pro- 
tection cannot be applied to the professional classes, 
including not only lawyers, judges, doctors, and 
ministers, but also teachers, architects, and engineers 
— in fact, nearly all persons living on salaries or 
wages. There are also many mechanical pursuits 
outside the range of protection, such as carpenters, 
masons, blacksmiths, plumbers, house painters, por- 
ters, drivers, railroad employes, workmen, servants, 
etc., etc., who are not protected, yet manage to get 
along without it. Without protection most all of 
them get more pay than is paid anywhere in Europe, 
because the demand is greater. 



1 62 Free Trade vs. Protection 

OUR SUPERIORITY CALLS FOR PROTECTION AGAINST 
THE INFERIORITY OF FOREIGNERS 

During the course of a public debate on the tariff 
a protectionist asked whether the great automobile 
business of this country could have been started or 
could now be maintained without protection. The 
question shows how pervasive and perverse the infec- 
tion of protection has become. Here was a new 
business that suddenly came into existence in all civi- 
lized countries at the same time. Then it was not the 
usual case of some one in this country trying to start 
a business, new here, but well established abroad. It 
was a brand new business everywhere. Yet with all 
our boasted superiority as to our superior inventive 
ability, our better fed, more highly educated, abler 
engineers and more intelligent mechanics — in spite 
of these and all the other of our advantages fondly 
claimed by us to give us superiority over the rest of 
mankind — we are so weak, miserable, and deficient 
that we must be protected against the inferiorities of 
the inhabitants of other lands in undertaking a busi- 
ness that is as new to them as it is to us. 

In spite of our superiority we must be protected 
against the inferiorities of the rest of mankind. This 
is the protectionist doctrine in reductio ad absurdum. 
There is more logic in the claim made in Europe 
that their inferiority (i. e. f lower wages) calls for 
protection against our superiority, 



Protection 163 



THE PULING CRY OF PROTECTION 

We boast we are the most favored country on this 
planet; that our institutions are the best and we are 
the smartest people on earth. Inconsistently with 
these magnificent claims of superiority, protection- 
ists keep up unceasingly their pitiful cry about our 
infant industries, and that we must have protection 
against the poor, miserable, half-fed workmen of 
Europe, the inefficient pauper laborers who are yet 
our inferiors. Protectionists pose as perpetual sup- 
plicants for charity, with no regard for the manly 
independence we associate with American character. 
The great overgrown industries, organized mostly 
as trusts, the richest business organizations of the 
world, beg, whine, and cry before Congress and the 
country with false pretences and sophisms and are 
perpetual mendicants for more and ever more " pro- 
tection." Lawyers, doctors, ministers, farmers, 
laborers, even street sweepers, support themselves 
and their families and pay their taxes, while these 
giants of the earth, in their insatiate greed, beg for 
and accept charity from their countrymen and live 
as parasites upon them. They claim even yet to be 
infant industries still needing pap from the public 
in the form of protection, but they can only be so 
regarded now upon the supposition that they are in 
their second childhood. Where is the American 
sense of humor we are so proud of? We pride 



164 Free Trade vs. Protection 

ourselves on being such a capable, able nation. We 
go about with a chip on our shoulder claiming to be 
the biggest, the brightest nation on earth, able to do 
anything we undertake and to beat all Europe in 
business enterprise. Then, forgetting all our boast- 
ing, we turn right round and whine that we are so 
weak and inefficient that we cannot compete against 
"the pauper labor of Europe ;" that our industries 
will perish without protection; that our stalwart, 
well-fed, well-educated, well-clothed, well-housed 
Americans, surpassing in these respects the citizens 
of all other nations, cannot compete with these infe- 
riors unless protected from them by the exclusion of 
their products! I repeat, where is the American 
sense of humor in protectionists, those advocates of 
special privilege to the stronger? 

PROTECTION CLAIMS IT BENEFITS US TO EXCLUDE 

GOODS MANUFACTURED AT LESS COST 

ABROAD THAN HERE 

But suppose they could be obtained for nothing, 
would it benefit us to exclude them ? Is it not evident 
that the nearer we can get to obtaining them for 
nothing, i. e. } the lower the cost, the greater the 
benefit to ourselves ? To hold otherwise would be to 
maintain that it is not the goods that we want, but 
the making them. Is it the goods or the manufac- 
turing that the consumers — that is, the whole Amer- 



Protection 165 



ican people — want? Protectionism says that with- 
out protective duties foreign goods would come into 
this country and be sold so cheap that similar goods 
could not be made here at a profit. But, I repeat, is 
it the goods themselves or the process of making 
them that we all want? 

PROTECTIONISTS ALARMED AT PROPOSAL TO REMIT 

DUTIES ON BUILDING MATERIALS, TO AID 

FIRE-STRICKEN CITIES 

After the great fire in Chicago it was deemed 
desirable to lighten the burden of the great expense 
of rebuilding by an act of Congress rebating the 
duties on materials used for that purpose. The next 
year came the great fire in Boston, and, naturally, 
the rebuilders of Boston wanted the same rebates. 
But meanwhile protectionists had taken alarm at this 
rift in the lute. The question arose again when San 
Francisco was in the same sad plight. If it had 
helped these people to take off the duties on imported 
building materials, why would it not benefit other 
people, who wanted to build, to take off the duties? 
And if this would help other people intending to 
build, why would it not help all the people to reduce 
the duties on all the other imports they use? For it 
certainly is an obstacle to the success of every Amer- 
ican (except those who receive this prize money, 
paid by all consumers — that is, everybody) that in 



1 66 Free Trade vs. Protection 

every new undertaking and in every person's daily 
life the cost of building, food, clothing, etc., etc., is 
increased unnecessarily in price through this " pro- 
tective " tariff. 

SUMNER ON THE SOPHISMS OF PROTECTION 

What neater way can there be to show the 
sophisms of the doctrines of protection than that 
presented by Professor Sumner on page 47 of his 
spicy little book called Protectionism? 

If a protectionist shows me a woolen mill and chal- 
lenges me to deny that it is a great and valuable 
industry, I ask him whether it is due to the tariff. If 
he says no, then I will assume that it is an inde- 
pendent and profitable establishment; but then it is 
out of this discussion, as much as a farm or a doc- 
tor's practice. If he says yes, then I answer that the 
mill is not an industry at all. We pay sixty per cent 
tax on cloth simply in order that that mill may be. 
It is not an institution for getting us cloth, for if we 
went into the market with the same products which 
we take there now, and if there were no woolen mill, 
we should get all the cloth we want ; but the mill is 
simply an institution for making cloth cost per yard 
sixty per cent more of our products than it otherzvise 
would. That is the one and only function which the 
mill has added, by its existence, to the situation. I 
have called such a factory " a nuisance/' The word 
has been objected to. The word is of no conse- 
quence. He who, when he gets into a debate, begins 
to whine and cry as soon as the blows get sharp 
should learn to keep out. What I meant was this: 
A nuisance is something which, by its existence and 



Protection 167 



presence in society, works loss and damage to the 
society — works against the general interest, not for 
it. A factory which gets in the way and hinders us 
from obtaining the comforts which we are all trying 
to get, which makes harder the terms of acquisition 
when we are all the time struggling by our arts and 
sciences to make those terms easier, is a harmful 
thing, and noxious to the common interest. Hence, 
once more, starting from the protectionists' hypothe- 
sis and assuming his own doctrine, we find that he 
cannot create an industry. He only fixes one indus- 
try, as a parasite, upon another, and just as certainly 
as he has intervened in the matter at all, just so 
certainly has he forced labor and capital into less 
favorable employment than they would have sought 
if he had let them alone. 



CHAPTER XI 

PROTECTION (Continued) 

professor sumner's illustration of 
" protection" 

TNT his Protectionism Sumner gives an excellent 
■*■ illustration of the fallacy of what is miscalled 
11 protection." 

A farmer goes to Washington to tell a statesman 
he has found iron ore on his farm. The statesman 
replies : " That *s good news. Our country is richer 
by another new and natural resource." The farmer 
agrees with him and tells him he wants to begin 
getting out his ore and making iron. The states- 
man tells him to go ahead and he hopes he will 
prosper. But the farmer doubts if it will pay, and 
thinks he can make more money if he keeps on 
farming. He still wants to mine his ore, however. 
It doesn't seem right to leave it in the ground and 
to keep on importing iron. So he suggests to the 
statesman that a duty be placed on imported iron, to 
enable him to get more for his American iron. Then 
he could see his way clear to give up farming and 
go to mining his ore and making iron. The states- 
man does not see it yet. He suggests that this would 

168 



Protection 169 



be authorizing the iron-maker to tax his neighbors 
and to throw on them the risk he is afraid to take 
himself. The farmer sees he has not talked the right 
dialect, so he begins all over again, and says : " Mr. 
Statesman, the natural resources of this country must 
be developed. American industry must be pro- 
tected. The American laborer must not be forced 
to compete with the pauper labor of Europe." The 
statesman answers : " Now I understand you. Now 
you talk business. Why did you not say so before? 
How much tax do you want?" Of course he gets 
the duty he modestly (?) asks for, and the price of 
iron goes up, although the supply has increased, and 
the protected iron-maker does not raise the wages 
he pays. Just as he did before he secured protection, 
he acts as any prudent man entering into business 
would act, and he pays as little as he can for wages ; 
i. e., he pays the market rate as determined by the 
demand and the supply, and this is not determined by 
protection. The next time another farmer wants to 
buy any iron he finds that it takes thirty bushels of 
his wheat, instead of twenty, to buy a ton of iron. 
So he asks what has happened to make iron so dear. 
" O, have n't you heard ? A new mine has been found 
in Pennsylvania. We have got 'a new natural re- 
source/ " is the reply. " I have n't got a new natural 
resource," he replies. " It 's as bad for me as if the 
grasshoppers had eaten up one-third of my crop." 

And Sumner concludes : 

The mine owners say they want to exploit their 



170 Free Trade vs. Protection 

mines. They do not. They want to make their mines 
an excuse to exploit the taxpayers. 

This is " protection ! " The extra wheat, or its 
value in money, is forced, by law, out of the posses- 
sion of the farmer into the possession of the artifi- 
cially created iron miner, who wants to make more 
than he can at farming. The government gets little 
or nothing, for the protective import tax is placed so 
high that the home ironmaker can supply the market 
at a little lower price than the price of the imported 
article with the duty added, which stops or nearly 
stops the importation. Yet every user of the article, 
iron or whatever it may be, that is " protected " pays 
nearly as much as if he used the foreign article and 
helped the United States revenue by paying the im- 
port duty. This sum, many times as much as the 
duty actually paid, perhaps twenty times as much, 
goes into the pockets of the protected manufacturers 
of the country. The new natural resource is not 
protected — that is, conserved; on the contrary, its 
exhaustion is stimulated (in the case of nickel it is 
said to be already about exhausted). The laborer 
is not protected, for he gets no higher wages than he 
did before the duty was imposed or was increased, 
the manufacturers naturally obtaining labor wher- 
ever they can find it at the lowest rates, as was shown 
by the facts brought out after the Lawrence strike of 
19 1 2. The only parties left to be protected are the 



Protection 171 



manufacturers, and they are the ones who receive the 
" prize money/' as Mr. Roosevelt very properly 
calls it. 

AMERICAN PRODUCTS AND MANUFACTURES SOLD 
CHEAPER ABROAD THAN AT HOME 

Then the American producers of iron, copper, and 
their products, meats, shoes, etc., etc., thus artificially 
stimulated to excessive production, finding they are 
producing more than the American market can take 
at their prices, which are not prices determined by 
the law of supply and demand, but prices made arti- 
ficially high through special favor (protection), send 
their surplus abroad, and, selling it there in competi- 
tion with the markets of the world, they sell their 
products cheaper than they sell the same products 
at home. American consumers are thus made to 
help support foreign consumers, through American 
so-called " protective" legislation! 

Sumner's opinion was that the tariff raised prices 
thirty to forty per cent. On the total annual con- 
sumption of goods in the United States this annual 
burden would now be nearly two billion dollars. 
Substantially the same results have been reached by 
Hobson, in The Fruits of American Protection, and 
by the New York Reform Club. This means that 
the consumers of this country pay to the producers 
nearly two billion dollars over and above the regular 



172 Free Trade vs. Protection 

and proper profits of these producers, not one cent 
of which goes into the treasury of the United States, 
being nearly two billion dollars more than these 
same producers would get for the same products if 
they sold them in Europe — and this is done to 
afford protection where none is needed. 

ALLIANCE OF B'USINESS AND BOSSES AT THE EXPENSE 
OF THE CONSUMERS 

The u big business " leaders of this country, most 
of them now trust magnates, joined forces years ago, 
with the result that political leaders lost sight of the 
welfare of the great body of consumers of this coun- 
try, the whole American people, in their greed for 
greater profits to business. Daniel Webster once 
said, " The deadliest canker that can attack the heart 
of a nation is the corroding disease of commercial 
avarice." This is the canker that has led protection- 
ists to join the trusts and the politicians in the unex- 
pressed but implied assumption that consumers exist 
for the benefit of producers. According to this view, 
the producers of the country are " it." Business is 
the great god and everything must give way to it. 
Business is good when prices go up, when the supply 
is unequal to the demand, when goods of sterling 
quality made elsewhere can be kept out of the United 
States by protection, and goods of poor and ever 
poorer quality, so as to wear out more and more 



Protection 173 



quickly, can be made in the United States, and thus 
the consumer can be compelled to buy oftener. An 
abundance of all products, of better and better qual- 
ity, so as to last longer, reasonable prices, so that 
the consumers of the country may raise their style of 
living, are to be deprecated because bad for " busi- 
ness" — that is, the producers. The cities of Japan 
are built of very light, combustible material, and 
when they have a fire it is so hard to check it that a 
great part of the city is destroyed. In the march of 
improvement they bought one of our steam fire 
engines and found it most efficacious, but the car- 
penters sent a petition to the government to discon- 
tinue its use because it interfered with their business. 
So it was thought in England, a century ago, that the 
destruction of machinery would help labor, for then 
all labor would be by hand. So, even now, many 
people think there must be some restriction on the 
supply of cotton, tobacco, and other articles, and 
that any surplus must be burnt, so as to keep up 
prices. According to this view, if all our food and 
clothing were to drop down from the sky, without 
cost or price, it would be bad for " business." In- 
stead of its being a source of satisfaction to Amer- 
icans to learn that a bountiful Providence has given 
us greater resources than we supposed we had, when- 
ever a new natural resource is unearthed, it is a 
source of still further worry to consumers trying to 
live within their income, for they know they will 



174 Free Trade vs. Protection 

have to pay a higher price than before, although the 
supply has increased. As soon as emery was found 
in the United States a tax was put on imported 
emery, and, of course, the price of emery went up. 
When the richest copper mines in the world were 
found here the same thing happened. u By another 
catastrophe," as Professor Sumner called it, nickel 
was found here, and again, through protection by 
favor of Congress, a duty put the price up. When 
Sumner wrote it was said that tin had been discov- 
ered in West Virginia and Dakota. Sumner said it 
was devoutly to be hoped this might prove to be 
false; for, if true, up would go the price of tin 
through a new duty. u The mine owners say they 
want to exploit the mine. They do not. They want 
to use the mine as an excuse to exploit the taxpay- 
ers." 

HOW LONG IS PROTECTION TO CONTINUE ? 

Stanwood says:* 

The benefit of the tariff, then, consists in its 
maintenance of the status quo during the period of 
transition. It cuts off the privilege of the foreigner 
to come in with cheaper wares and to gain a foot- 
hold in the market, if perchance he had gone forward 
at a little more rapid pace than the American in 
adapting his manufacture to new conditions. 

* American Tariff Controversies in the Nineteenth Century, 
vol. 2, p. 256. 



Protection 175 



This is a plea for the protection of inefficiency. 
The American manufacturer is to be protected be- 
cause his foreign rival can make a better article ! 

And as to this period of transition, how long is it 
to last? It has had a duration of a century and a 
quarter already. Does it want a millenium? 

THE UNIVERSAL BUSINESS IS BUYING AND SELLING 

MONEY 

It is not generally recognized that there is one 
kind of business we are all engaged in — buying and 
selling money. Every purchase made is a sale of 
money in return for something the seller wants more 
than he wants the money he parts with. Every sale 
made is a purchase of money in return for some- 
thing the seller parts with that he wants less than 
he wants the money he receives in exchange for what 
he parts with. Every purchase made is a purchase 
of something the seller wants less, in exchange for 
what he wants more, u e. y the purchaser's money. 
Every sale made is a purchase of money by the seller, 
who wants it more than he does what he sells. The 
terms " buyer" and " seller" are but relative. Each 
party to a sale is, therefore, both seller and buyer. 
Each sells what he has and wants to dispose of 
(money, land, goods, etc.) and each buys what the 
other party has and wants to dispose of (goods, 
land, money, etc.). As sellers we want high prices 



176 Free Trade vs. Protection 

and they are promoted by scarcity. As buyers we 
want low prices and they are promoted by abun- 
dance. The " higgling of the market" has proved 
to be the best way for these conflicting interests to 
come to terms. When protection comes in it gives 
an unfair advantage to one side, the side that a few 
only, relatively, belong to — the producers — as 
against the side that all belong to — the consumers 
of the whole country. 

BUSINESS IS THE ORGANIZATION OF LABOR AND 

CAPITAL TO SUPPLY THE WANTS OF 

THE COMMUNITY 

Business is not the mere accumulation of money in 
the control of capitalists who monopolize our natural 
resources and their use through special legislation. 
Legitimate business is the organization of labor and 
capital to satisfy the needs of the community. A 
new way to supply a human need creates a new indus- 
try, but no system of taxation can do it. People long 
wanted some easy way to talk to each other when 
beyond the reach of their voices. The telephone was 
invented and became a success because it supplied the 
want. A new business came into existence. The 
measure of its gain is not to be found in the number 
of persons engaged in putting up and keeping in 
order its wires, batteries, and machines, in receiving 
calls and connecting the wires of persons wanting to 



Protection 177 



talk to each other. The gain is to be measured by 
the satisfaction of the needs of those who, being far 
apart and wanting to communicate with each other, 
find it an economy to use the telephone instead of 
using the telegraph, the mail, or a messenger, or 
going to see each other. This is an apt illustration 
of the creation of a new industry and the legitimate 
carrying on of a new business with resulting benefits 
to all. No system of protection through taxation 
could ever accomplish such results. 

PROTECTIONISM TOO COMPLETELY IN CONTROL IN 
WASHINGTON 

The tariff has been made more offensive from time 
to time by administrative action. Forced construc- 
tion of the language of the law has repeatedly made 
duties as onerous as possible, in violation of the spirit 
of the law. Information by the departments is freely 
produced tending to help the cause of protection, to 
show its advantages, and to bolster up excuses for 
construing strictly every item in the schedules of the 
tariff. Information tending to help the cause of free 
trade, to get at the facts as to the cost of wages and 
of materials abroad that tend to show the incorrect- 
ness, to use mild language, of many protectionist 
assertions, is delayed, withheld, and its publication 
prevented upon frivolous pretexts. Official reports 
of United States officials at home and abroad are 



178 Free Trade vs. Protection 

prepared from the protectionist point of view rather 
than from that of impartial investigation to get at 
the facts. It will take time to change the attitude of 
Washington officialdom in the search for the truth 
as to the effect of nearly fifty years of protection 
upon the development of American commerce. 

CLAIMS MADE BY PROTECTIONISTS ONLY TO BE SUBSE- 
QUENTLY ABANDONED SOONER OR LATER 

Was it Josh Billings or Artemus Ward who was 
acquainted with a man who knew more things that 
were not so than any other person he ever met? 
Here are some of the things that " are not so " that 
protectionists have claimed, most of which they have 
already abandoned. They will abandon the rest of 
them in course of time : 

1. Protection is to be moderate in amount. 

2. Protection is to be only temporary. 

3. The ultimate effect of protection will be to 
reduce the price of the domestic article. 

4. The foreigner pays the tax. 

5. The Cobden Club, that horrible English free 
trade club, is sending over " British Gold" to bribe 
us into accepting free trade. 

6. The tariff raises wages. 

7. The tariff is necessary to insure a reasonable 
profit to the American manufacturer. 



Protection iyg 



8. The tariff protects the American laborer 
against the cheap pauper labor of Europe. 

9. There must be that measure of protection 
necessary to equalize the difference in cost between 
here and abroad. 

UNFULFILLED PROMISE OF PROTECTIONISTS TO KEEP 

THE WAR TIME PROMISES TO REDUCE HIGH DUTIES 

AS THE INTERNAL REVENUES CAME OFF 

It is easy to see there must be a proper relation 
between custom-house duties and excise duties. If 
the excise duties are so high that imported articles 
can be sold cheaper than the same home-made arti- 
cles, the tariff works against the home producer. If 
excise duties are low or are removed entirely, a 
lower custom-house duty will check or prevent im- 
portations of similar foreign articles. It requires 
expert knowledge to adjust the two so as to favor 
neither. At the end of the war and for years after- 
wards this was not generally understood by our 
people. But protectionist manufacturers knew it, 
and, taking advantage of the popular desire to 
reduce and end internal revenue duties, they carried 
such legislation through Congress without equiva- 
lent reduction of high protective duties. The result 
was as if the internal revenue duties had been let 
alone and the custom-house duties had been raised, 
and the people were misled. 



180 Free Trade vs. Protection 

The Republican Party finally, in defiance of these 
principles, declared, " If there still remains a larger 
revenue than is required for the wants of the govern- 
ment, we favor the entire repeal of internal revenue 
taxes rather than the surrender of any part of our 
protective system at the joint behest of the whiskey 
trust and the agents of foreign manufacturers." 

The last part of this is pure buncombe. 

FINAL BREACH OF REPUBLICAN PLEDGES TO LOWER 
CUSTOMS 

The McKinley bill of 1890 was a repudiation of 
long-accepted, moderate interpretation of the pledges 
given during and after the war to lower customs 
duties when the financial condition would allow. In 
its place there became established the doctrine that 
protection was the cause of our prosperity and that 
our future depended upon the acceptance of protec- 
tion as a permanent national policy. Everyone re- 
joiced who had anything to sell, the price of which 
would be increased at each tariff raise. The old 
Republican leaders, like Morrill, Allison, and Sher- 
man, who believed in moderate protection, were now 
overruled and Aldrich stood at the front looking out 
for the interests of the Industrial League, the Iron 
and Steel Association, the National Association of 
Wool Manufacturers, and others. 



Protection 181 



PROTECTIONIST PRETENCES: THE DUTY IS PAID BY 
THE FOREIGNER 

As the theory that prosperity is caused by the tariff 
did not work, it was claimed that the foreigner send- 
ing his goods to this country reduced his price by the 
amount of the tariff in order to secure sales here. 
This did not work any better, for it was pointed out 
that the importer, whether American or European, 
and whether living in this country or in Europe, did 
not buy what he imported with the amount of the 
American tariff duties taken off. So this had to be 
given up. Protectionism is full of these false pre- 
tences, sophistical reasonings, and patent absurdities, 
and as fast as the old ones are overthrown others 
equally false are put forward, only to be in turn 
demolished. 

PROTECTIONIST PRETENCES: THE TARIFF IS THE 
CAUSE OF PROSPERITY 

We have seen the excuses made for increased 
duties in 1861 and later — that is, they were neces- 
sary to pay the expenses of the war; they were to be 
moderate and temporary, and were to be reduced 
after the war. Alarmed by the " Great Debate " of 
1886, the protectionists tried to throw dust in the 
eyes of free traders (meaning tariff for revenue only 



182 Free Trade vs. Protection 

men) by claiming that the tariff was the cause of 
prosperity. No, they said, the tariff is not a tax; it is 
the cause of our prosperity. 

FALSE CLAIMS OF PROTECTIONISTS THAT THERE CAN 
BE NO MONOPOLY IN A PROTECTED ARTICLE 

Kelly, Aldrich, and others claimed that domestic 
competition would prevent it. But the trusts multi- 
plied and most of them were in the highly protected 
industries. President Cleveland had said, in his mes- 
sage on the tariff : 

It is notorious that competition is too often 
strangled by combinations quite prevalent at this 
time, and frequently called trusts, which have for 
their object the regulation of the supply and price of 
commodities made and sold by members of the com- 
bination. The people can hardly hope for any 
Consideration in the operation of these selfish 
schemes. . . . The necessity of combination to 
maintain the price of any commodity to the tariff 
point furnishes proof that someone is willing to 
accept lower prices for such commodity, and that 
such prices are remunerative. 

Thus, by combining and forming trusts competi- 
tion is eliminated, only enough is supplied to Amer- 
icans to meet the demand at the trusts' prices, and 
the excess *s sold abroad cheaper than at home. 



Protection 183 

A PAEAN FOR PROTECTION 

In concluding his painstaking but not always im- 
partial work, American Tariff Controversies, 
Stanwood indulges in a triumphal song of victory 
for protection, rather bacchantic in tone, to the effect 
that the American people are fully convinced that 
the protective system has added immensely to their 
wealth, their prosperity, and their industrial inde- 
pendence, that it has been and is good for them and 
they propose to continue it. 

This is like the attitude of the man who, having 
drunk to excess all his lifetime and is still hale and 
hearty, attributes all his success to drink, glories in 
his habit, and therefore proposes to continue it. 



CHAPTER XII 

WAGES 



MEANING OF HIGH WAGES " 



WHEN it is said that wages are high, either 
one of two very different things may be 
meant. One is that a day's labor brings a large 
sum of money, without reference to the purchasing 
power of that money; the other is that the money 
paid for a day's labor will go far in supplying the 
laborer's wants. In this, the true sense, wages are 
high in this country, not only now, but ever since 
the settlement of the country, and of course long 
before such a thing as a tariff was ever thought of. 
Therefore, no tariff created our high wages. One 
reason is that the demand has exceeded the supply. 
This has remained so because, with plenty of land 
awaiting occupation, if wages fell below a certain 
rate, higher than the European rate, the laborer 
could take to the land with profit and still keep the 
style of living he had kept. Another reason is the 
superior efficiency and greater productive power of 
the American laborer, due to a variety of causes, 
such as our bracing climate, better education, better 

184 



Wages 185 

food, a higher standard of home comforts and man- 
ner of living. It is evident that no tariff law has 
had anything to do with these matters, for they 
existed before there was any tariff and will continue 
to exist whatever the tariff may be. And if high 
wages are due to tariffs, why have not wages risen 
at every rise in tariff rates? As to the assertion of 
protectionists that free trade will lower wages, it is 
enough to cite the well known fact that wages have 
steadily risen and pauperism has steadily decreased 
in England since the adoption of free trade. Wher- 
ever labor is efficient and productive, high wages 
are paid. The employer can afford to pay high 
wages because he gets much in return, with the re- 
sult that the cost of production by the piece or unit 
of production is low. This must be so, for other- 
wise the employer could not afford to continue to 
pay high wages. Certainly our smart business men 
would not carry on business year after year and 
decade after decade at a loss. 

It is " pauper labor" that is dear, because it is 
unproductive. European protectionists have, there- 
fore, a strong argument when they claim they must 
have protection against the efficient, productive 
labor of this country, which is not in reality dear, 
and our protectionists are in error when they claim 
we must have protection against the inefficient 
"pauper labor" of Europe, which is really dear 
labor. 



1 86 Free Trade vs. Protection 

HIGH-PRICED LABOR MEANS EFFICIENCY OR GREATER 

PRODUCTIVITY, WITH CONSEQUENT LESSENED 

COST PER UNIT 

Andrew Carnegie said: " It is not the lowest but 
the highest paid labor, with scientific management 
and machinery, which gives cheapest products. 
Some of the important staple articles in Britain, 
Germany, and America are produced cheapest with 
labor paid double. " 

Mr. Hill, statistician in the State Department, 
Washington, said in 1882, that 5,250,000 workmen 
in the United States produced double what Great 
Britain did, with 5,140,000 workmen. 

The secretary of the British Trade Association, 
J. S. Jeans, said that the average annual output of 
the British makers of pig iron is about 25,000 tons 
per furnace, while the American average is 61,000 
tons per furnace. 

Mr. Evarts, while Secretary of State, said in 
1878, summarizing the facts obtained through 
American consuls: "The average American work- 
man performs from one and a half to twice as much 
work in a given time as the average European 
workman." 

SUPERIOR PRODUCTIVE CAPACITY OF AMERICAN 
FACTORY OPERATIVES 

The following instructive and reliable figures are 



Wages 1 87 

from that eminent authority, Mulhall's Progress of 
the World. They illustrate the truth of the above 
statements : 

The productive capacity, each year, of a factory 
operative is as follows : 

In the United States $1,560.00 

In the United Kingdom 1,120.00 

In France 1,100.00 

In Germany 515.00 

In Russia 530.00 

In Austria 600.00 

In the Low Countries 500.00 

In Spain and Portugal 595-00 

In Italy 540.00 

In Scandinavia 400.00 

Average for all Europe 780.00 

Average for the United States 1,560.00 

In other words, the labor of one man in this 
country produces more than enough to supply his 
wants by a greater surplus than in any other country, 
and this surplus increases every year. Or, as differ- 
ently put by Cairnes in his Political Economy, the 
product of a day's labor in the United States enables 
a workman to command the product, in round num- 
bers, of the product of a day and a third's labor in 
Great Britain, of the product of a day and a half's 
labor in Belgium, of the product of from one and 
three-quarters to nearly two days' labor in France 



1 88 Free Trade vs. Protection 

and Germany, while it would probably command 
the product of four or five days' labor in China and 
India. This explains the argument used on the Con- 
tinent that they must have protection against Ameri- 
can high-priced labor. It shows further that we 
need no protection against European inefficient 
labor. 

In an unguarded moment Senator Gallinger from 
New Hampshire made the following statement in 
the United States Senate: 

Mulhall has shown that a farm hand in the United 
States does as much as two in the United Kingdom, 
three in Germany, five in Austria, and seven in 
Russia. The farm laborers of Europe do nine times 
the work to get double the result of the farm 
laborers in the United States. That is, it takes 
four and a half Europeans to equal an American. 

Senator Gallinger is a strong protectionist, it must 
be remembered, and yet, with this marvelous show- 
ing, he contends, with his party, that the poor, 
puling, weak American who is so strong and efficient, 
must have protection against the pauper labor of 
Europe that is so much weaker than ours! 

So good a Republican and protectionist as Blaine 
said that the actual labor cost of the American 
product is less, because the effectiveness of Ameri- 
can labor is superior to that of the workingman of 
any other nation on earth. And yet protectionists 



Wages 189 

whine and cry that without protection they must 
shut up their factories! "We are so strong that 
we can beat the world." Yet, "We are so weak 
that we cannot compete unless we are protected." 
Is not this an absurd position for Americans to put 
themselves in before the world? 

PROTECTION DOES NOT CAUSE HIGH WAGES 

When manufacturers go to Washington and tell 
the Committees of Congress that they must have 
protection because they have to pay high wages, 
what they mean is, they have to pay such high wages 
that without protection they cannot carry on cer- 
tain manufacturing with profit, and they must have 
the right to exact a subsidy from the consumers of 
their products by means of a duty on the same for- 
eign goods that will keep most of them out of the 
country and at the same time will enable these pro- 
tected manufacturers to raise their prices almost to 
the level of the duty-paid imported article. They 
do not mean that if Congress will grant their prayer 
they will go home and raise the wages of their work- 
men. They get the protection they want and they 
pay the market price for wages, and in many cases 
these wages are lower in protected than in unpro- 
tected industries. Then protection does not raise 
wages nor cause high wages. It only enables the 
protected manufacturer to put money into his own 



190 Free Trade vs. Protection 

pocket while carrying on a business that would be 
unprofitable were it not for protection. By means 
of protection he is enabled to carry on his pauper 
industry at the expense of the American public. 

WAGES IN THE UNITED STATES 

According to the United States Census of 1900, 
in the four great industries (textile, iron, boots and 
shoes, and men's clothing) wages averaged as fol- 
lows per week: Men, $9.77; women, $5.39; chil- 
dren, $2.61. Yet we are told that protection brings 
high wages ! By way of contrast, note that the 
unprotected hod carrier receives sometimes as much 
as five dollars a day, while no one knows what the 
unprotected plumber may not charge for his services. 

It is clear that there is no connection or relation 
between protection and wages. Wages are high in 
some unprotected industries, they are low in some 
unprotected industries. Wages are high in some 
protected industries, they are low in some protected 
industries. The price of wages is regulated by the 
demand and the supply, not by the tariff. It was 
high in the United States before there was any tariff. 
High wages came first, tariffs came later. There- 
fore, no tariff created high wages. Protectionist 
manufacturers do not get the tariff raised and then 
raise wages, they continue to pay the same wages 
as before they secured more protection, and they 



Wages 191 

lower them, as all do, whenever the supply exceeds 
the demand. 

In 1907 the average weekly wages in Rhode 
Island for fifty-eight hours' work was: Carding 
room, $7.80; mule spinners, $12.92; speeders, 
$10.62; weavers, $10.38. In the woolen industry, 
for pickers, $8.00; women spinners, $7.25; men 
spinners, $12.91; weavers, $15.34. Children who 
should be in schools were in the mills. 

WOODROW WILSON ON PROTECTION OF AMERICAN 

LABOR 

In an address by now President Wilson before 
the real estate men of Boston, January 27, 19 12, he 
said : 

American labor gets higher wages because it is 
more valuable. Now, any intelligent labor can com- 
pete with any pauper labor, and the intellectual 
absurdity of " protecting " intelligent men from un- 
intelligent is too patent to need explanation. When 
I hear the reports that tell of protecting the Amer- 
ican laborers that I know of against the pauper labor 
of Europe, I can only smile that my fellow voters 
are so gullible. . . . When you want to cut down 
your working force, which of your workmen do you 
dismiss first? Those that get the smallest wages. 
You don't dismiss the high-priced men first. If you 
did, you would dismiss the president and secretaries 



192 Free Trade vs. Protection 

and superintendents, and you cannot get on without 
those who earn larger salaries. You don't dismiss 
from the top, but from the bottom, which is your 
admission that the most economical labor you have 
is your highest priced labor. That is what you 
cannot dispense with. It is high-priced not because 
of the tariff. O, I wish I had time to explode that 
ancient myth. No thoughtful economist in the world 
knows so little as not to be able to explode it. Only 
business men who will not take the pains to become 
economists believe it, and some of them do not 
believe it. 

LOWER DUTIES WILL NOT CAUSE LOWER WAGES 

High protection did not cause high wages, nor 
will low protection cause low wages; and it is 
through gradual, small reductions, passing through 
lower protection, that we must at last reach free 
trade — that is, a tariff for revenue only. It is a 
mistake to suppose that a lowering of duties will 
bring about lower wages. Lower duties mean an 
increase of imports, and an increase of imports 
means an increase of exports, which means mdre 
demand for labor to make the articles exported. 
There would be no lowering of wages, but labor 
would be set to work where it would accomplish 
better results. Of course good judgment must be 
exercised in bringing about the change. No free 
trader (meaning always a tariff for revenue re- 



Wages 193 

former) advocates any sudden abandonment of pro- 
tection. But it is essential that duties be lowered 
eventually to a point that will not keep out any for- 
eign article, for otherwise the American manufac- 
turer would still have a monopoly and any monopoly 
is odious at common law. The American manu- 
facturer is competing with his foreign rival and 
underselling him now in the foreigner's home mar- 
ket. Why can he not do the same thing here at 
home without protection and without paying the 
freight to Europe on his goods? 

THE GREATER EFFICIENCY OF AMERICAN HIGH- 
PRICED LABOR 

An American manufacturer secured a contract in 
Japan for several million dollars' worth of Ameri- 
can locomotives, in competition with bids from Eng- 
land and Germany. A master mechanic of the shops 
of the Imperial Railways maintained that locomo- 
tives could be made cheaper in Japan than in the 
United States because the wages they paid were 
only one-fifth the wages paid here. A comparison 
of actual cost showed that the labor cost on a Jap- 
anese locomotive was three and a half times what 
it is in the United States. Seven hundred and twenty 
American locomotives are running on the railroads 
of Japan. What need has any American locomo- 
tive works for protection, with such a showing? 



194 Free Trade vs. Protection 

^HE SO-CALLED HIGH WAGES UNDER PROTECTION 

Bulletin 57 of the Census Bureau shows that 
44,452 men and boys, 24,552 women and girls, and 
3,743 children under sixteen years of age, employed 
in the manufacture of woolen goods, received a 
weekly average of $7.61. Employees of the steel 
mills of Pittsburg, Chicago, and Milwaukee, all 
strong, healthy men, receive $1.75 for twelve hours 
a day, seven days in the week, $12.25. ^ n these 
averages are included the wages of skilled mechanics 
and head men. 

The average weekly wages paid in cotton mills 
in England is $6.37. The average in New Eng- 
land is about $7.00 and in the southern mills $4.10. 
These are the vaunted high wages of protection. 
Compare them with the average wages of house 
servants, carpenters, stenographers, typewriters, 
etc., of from ten to twenty-five dollars a week (in- 
cluding the value of the board of house servants), 
yet all unprotected employments. 

CHANGE OF GROUND OF PROTECTIONISTS AND FREE 
TRADERS AS TO HIGH-PRICED WAGES 

Until about 1840 protectionists argued in favor 
of protection that it was needed for the protection 
of young industries as they were then called, mean- 
ing pauper industries, because the public must be 



Wages 195 

taxed to keep them going. But after 1840 their 
argument changed to the necessity of protection to 
American labor. Until this time the difference in 
wagfes here and abroad had been an argument of 
the free traders against protection. The use of 
this argument implies the existence of industries de- 
pendent on high wages. Taussig says:* 

Obviously this change in the line of argument indi- 
cates a change in the industrial situation. Such an 
argument in favor of protection could not have 
arisen at a time when protective duties existed but 
in small degree and when wages nevertheless were 
high. Its use implies the existence of industries 
which are supposed to be dependent on high duties. 
When the protective system had been in force for 
some time and a body of industries had sprung up 
which were thought to be able to pay current wages 
only if aided by high duties, the wages argument 
naturally suggested itself. 

But wages always have been high in the United 
States, tariff or no tariff. There never has been 
any relation between wages and the tariff. We 
have had our ups and downs in our tariff legisla- 
tion, especially during the last generation. Yet 
wages have always been high, speaking generally, 
especially in some unprotected industries. During 
the early controversy on this subject between pro- 
* Tariff History of the United States, p. 66. 



196 Free Trade vs. Protection 

tectionists and free traders, there had not been a 
sufficient accumulation of statistics to answer the 
claim of protectionists that we must have protec- 
tion against the " pauper labor" of Europe. Now 
we know that this labor which protectionists so de- 
light in calling pauper labor, is not cheap labor, 
because it is ineffective, and the high-priced labor 
of this country is cheaper per unit because of its 
superior efficiency. 

THE CONDITION OF LABOR IN THIS COUNTRY UNDER 
HIGH PROTECTION 

In 19 1 2, in the House of Representatives in 
Washington, Mr. Underwood said: 

Mr. Speaker, gentlemen on that side of the House 
are not willing to take our statement in reference to 
the condition of American labor. I wish to call 
attention to a statement in reference to the condition 
of American labor in the iron and steel industry, 
published in the minority report on the investigation 
of the United States Steel Corporation, signed by 
Hon. Augustus P. Gardner and Hon. Henry G. 
Danforth. (H. Rpt. 1127, pt. 2, 62d Cong., 2d sess.) 

"The labor situation in certain manufacturing 
departments of the steel industry has always been 
bad, and today is bad. As a rule, in the plants of 
the corporation, conditions are better than in the 
plants of the independents. In rolling mills and the 



Wages 197 

blast furnaces, men are often required to work, or 
at all events remain on more or less exacting duty, 
for twelve hours a day for seven days in the week. 
Incredible as this may seem, the fact is indisputable." 

WEALTH IS THE PRODUCT OF LABOR 

The protection doctrine is that the wealth of 
this country is in its labor, meaning human labor. 
But human labor is only one form of labor. A 
machine saves human labor by doing work that 
otherwise would have to be done by human hands. 
Even in this broader sense, labor is not wealth, for 
wealth is the product of labor. We might get along 
without any human labor at all if we only knew 
how to harness the powers of nature that are all 
about us, such as waterfalls, the sun's rays, the winds 
that blow, the electricity in the air or in matter, and 
the unknown forces of nature. Would there be no 
wealth if, with control of the powers of nature, 
every human want could be supplied without any 
human labor? It is not labor that we all want, but 
what labor produces, and the more we can dispense 
with human labor as a source of power and can 
substitute in its place labor by machinery, through 
steam, electricity, and other powers, the better off — 
that is, the wealthier — we shall all be. In their 
own private business all men, including protection- 
ists, act upon the principle that the gain is the great- 



198 Free Trade vs. Protection 

est when the least labor is required to produce the 
desired result. Protection proceeds upon the theory 
(which is not the fact, for experience demonstrates 
its falsity) that the gain is the greatest when the 
most labor is required to produce the desired result. 
Were it not for this erroneous notion of protec- 
tionists they would see, in common with free traders, 
that it is good, sound, commonsense economy to 
exchange home products for foreign products when 
there is a saving of labor on both sides by so doing. 

I condense the account given by Miss Tarbell of 
an amusing episode. Mr. Mills said: u Suppose that 
a laborer who is earning a dollar a day by his work 
finds a suit of woolen clothes he can buy for $10.00 
without the tariff. Then the suit can be procured 
for ten days' work, but the manufacturer goes to 
Congress and says: 4 I must be protected against 
the man buying this cheap suit of clothes.' And 
Congress protects him by putting on a duty of 100 
per cent, or $10.00. Now it will require the laborer 
to work twenty days to get this suit of clothes. 
Now tell me if ten days of his labor have not been 
annihilated." 

Mr. McKinley answered lightly: "It is an old 
story. It is found in Adam Smith, but it is not 
true." To prove it was not true he aroused the 
attention of the House by dragging from his desk 
a suit of ready-made clothes. He held them up 
triumphantly and showed the receipted bill, ten 



Wages 199 

dollars, and said, " So, you see, the poor fellow 
did not have to work ten days more to get that suit 
of clothes." 

Mr. Mills said nothing then, but he began to in- 
vestigate. He sent to the shop where, according to 
the receipted bill read by McKinley and printed in 
the Congressional Record, the suit had been bought, 
and got one like it. Then he traced it to the manu- 
facturer and got from him an exact analysis of its 
cost. He decided to use this information in his 
speech closing the debate, but forgot it that day 
while talking, he was so full of facts and figures. 
His son was in the gallery and sent a note down to 
him saying: " Don't forget McKinley's suit of 
clothes." He smiled and gave the facts. The suit 
cost $4.98, omitting tariff charges, and the cost of 
the labor was $1.65 of this $4.98. The tariff duty 
on the wool was $1.70. Adding this to the $4.98 
we have $6.68, on which the manufacturer was 
allowed a duty of forty per cent to compensate for 
the wool tax, and also thirty-five per cent to pro- 
tect him against the imported article. The whole 
cost, with all duties added, was $10.71. "Of 
course," said Mills, "the manufacturer had to un- 
dersell the foreign suit and to do so he dropped 
under him seventy-one cents and sold his $4.98 suit 
for $10.00 with the help of the tariff." 

As for McKinley's comment that the illustration 
came from Adam Smith, Mills told a story of the 



200 Free Trade vs. Protection 

small boy who was caught thieving and whose 
mother, in chiding him, said, u Don't you know it 
is wrong to steal? Don't you know what the Bible 
says?" He replied, u O now, mother, that's an 
old story. Moses told it 4000 years ago." 

" As a matter of fact, Mr. McKinley's answer to 
Mr. Mills had been a trick. Mr. Mills had not said 
that a man could not buy a suit of clothes for $10.00 
in the United States; he said that if a tariff of 100 
per cent was put on a suit which could be sold for 
$10.00 without the tariff, a man would pay $20.00 
for his suit. Mr. McKinley had diverted attention 
from the real point by holding up a ten-dollar suit 
in the halls of Congress." * 

The incident is a fair illustration of the sophis- 
tical reasoning used by protectionists. 

SMALL PERCENTAGE OF LABOR IN PROTECTED 
INDUSTRIES 

When the Mills Tariff bill was under discussion 
in Washington in 1886, the " Great Debate" lasted 
more than a month and one hundred and fifty-one 
speeches were made. The free traders (meaning 
the tariff for revenue only men) dwelt with par- 
ticular emphasis on the small per cent of wages 
directly affected by the tariff. Three able, expert 
statisticians worked out the problem independently 

*Tarbell, The Tariff in Our Times, page 161. 



Wages 201 

of each other. The results showed conclusively 
that high wages are not due to protection. Accord- 
ing to Mr. Worthington Ford, 4.07 per cent; ac- 
cording to Mr. E. B. Elliot, 4.34 per cent, and, 
according to Mr. Simon Newcomb, 5.5 per cent of 
labor was found to be engaged in protected indus- 
tries. Or, to put the result in another form, about 
95 per cent of the wages paid in the United States 
are not affected by tariffs, although the earners of 
these wages are obliged to pay higher prices for 
many of the necessities of life because of these 
tariffs. 

EVEN IN THE HIGHLY PROTECTED INDUSTRIES, BUT 

A SMALL SHARE OF THE EXTRA PRICE CAUSED 

BY PROTECTION GOES TO THE WAGE 

EARNER 

During the " Great Debate" in 1886, Mills said: 

I find in this report one pair of five-pound 
blankets. The whole cost, as stated by the manu- 
facturer, is $2.51. The labor cost is thirty-five cents. 
The tariff is $1.90. Now, here is $1.55 in this tariff 
over and above the entire labor :cost of these 
blankets. . . . Here is one yard of flannel, weighing 
four ounces: it cost eighteen cents, of which the 
laborer got three cents, the tariff on it is eight cents. 
How is it that the whole eight cents did not get into 
the hands of the laborer? . . . One yard of cash- 



202 Free Trade vs. Protection 

mere, weighing sixteen ounces, costs $1.38. The 
labor cost is twenty-nine cents : the tariff duty is 
eighty cents. One pound of sewing stilk cost $5.66 : 
the cost for labor is eighty-five cents, the tariff is 
$1.69. One gallon of linseed oil costs forty-six 
cents: the labor cost is two cents, the tariff cost is 
twenty-five cents. One ton of bar-iron costs $31.00. 
The labor cost is $10.00. The tariff fixes several 
rates for bar-iron and gives the lowest rate $17.92. 
One ton of foundry iron costs $11.00: the labor 
costs $1.64, the tariff is $6.72. None of these tariffs 
go to the laborer. The road is blocked up. They 
cannot pass the pocket of the manufacturers. This 
" great American " system that is intended to secure 
high wages for our laborers is so perverted that all 
its beneficence intended for the poor workingman 
stops in the pockets of his employer, and the laborer 
only gets what he can command in the open market 
for his work. 



CHAPTER XIII 

PROTECTION NOT NECESSARY IN THE 
UNITED STATES 

JOHN STUART MILL ON PROTECTION 

npHE most powerful argument ever made for 
* protection is that presented by Mill, who was 
a free trader. It is as follows: 

Protection to Native Industry : a phrase meaning 
the prohibition, or the discouragement by heavy 
duties, of such foreign commodities as are capable 
of being produced at home. . . . The only case in 
which> on mere principles of political economy, 
protecting duties can be defensible, is when they are 
imposed temporarily (especially in a young and 
rising nation) in hope of naturalizing a foreign 
industry, in itself perfectly suitable in the circum- 
stances of the country. The superiority of one 
country over another in a branch of production 
often arises only from having begun it sooner. There 
may be no inherent advantage on one part, or dis- 
advantage on the other, but only a present superior- 
ity of acquired skill and experience. A country 

203 



204 Free Trade vs. Protection 

which has this skill and experience yet to acquire, 
may, in other respects, be better adapted to the pro- 
duction than those which were earlier in the field; 
and, besides, it is a just remark, that nothing has a 
greater tendency to promote improvements in any 
branch of production than its trial under a new set 
of conditions. But it cannot be expected that indi- 
viduals should, at their own risk, or rather at their 
certain loss, introduce a new manufacture, and bear 
the burden of carrying it on, until the producers 
have been educated up to the level of those with 
whom the processes are traditional. A protecting 
duty, continued for a reasonable time, will some- 
times be the least inconvenient mode in which a 
nation can tax itself for the support of such an 
experiment. But the protection should be confined 
to cases in which there is good ground of assurance 
that the industry which it fosters will, after a time, 
be able to dispense with it : nor should the domestic 
producers ever be allowed to expect that it will be 
continued to them beyond the time strictly necessary 
for a fair trial of what they are capable of accom- 
plishing.* 

Observe the limitations that Mill places on the 
grant of this privilege. He says that protective 
duties are to be imposed only temporarily and are 
to be continued only a reasonable time. He speaks 
of granting protection as u the least inconvenient 
mode in which a nation can tax itself for the sup- 

* Principles of Political Economy, bk. V., Ch. 10, §i. 



Protection Not Necessary 205 

port of such an experiment." He says, further, 
there must be good ground of assurance that the 
industry fostered by protection will, after a time, 
be able to dispense with it. He limits further what 
he means by protection limited in time when he says 
that it is not to be continued beyond the time strictly 
necessary for a fair trial. 

American protectionists can find but cold comfort 
from such protection as this; and, judged by the 
limitations Mill places upon granting it, protection 
should long ago have ceased in the United States. 
In agreement with Sumner and other economists, 
I am not prepared to admit that protection should 
be granted even under the circumstances stated. 
The case supposed is, moreover, that of a nation 
with full power to adopt a system of protection, 
which is not our case, for the grant of the special 
privilege of being protected by law is unconstitu- 
tional in essence in this country, as we have seen. 
Mill limits it still further to the case of a young 
nation and this is no longer a young nation. 

As to the introduction of a new manufacture by 
individuals at their own risk, Mill seems to over- 
look the fact that whenever young men go into busi- 
ness, even if it be the business of carrying on some 
old manufacture, they do so at their own risk. It 
is not considered necessary for the state to grant 
them the special advantage of being "protected" 
by law. They must take their chances. 



206 Free Trade vs. Protection 

THE UNITED STATES HAS NOT NEEDED PROTECTION 
FOR NEARLY A CENTURY 

After making every allowance possible for the 
correctness of Mill's position and granting, for the 
sake of the argument, that in 1789 there was ground 
for trying the experiment of granting moderate pro- 
tection, temporarily, I affirm that, soon after the 
War of 18 12, now more than a century ago, this 
country has never needed protection for its principal 
industries, because it has not fulfilled during this 
time the conditions under which, according to Mill, 
it is permissible to grant protection. It is my pur- 
pose to present now the reasons that have brought 
me to this conclusion, and, in order that they may 
be understood, it will be necessary to examine the 
condition of manufacturing in this country since 
1789, and our protective tariff legislation since that 
time. 

THE FIRST TARIFF, THAT OF 1 7 89 

We must take into consideration the general 
ignorance of economics at the time and the conse- 
quent crude and barbaric laws of trade resulting 
therefrom. Smith's Wealth of Nations had been 
published in 1776, and, although there is evidence 
that it was known to many in this country, its influ- 
ence had not yet had time to permeate legislation. 



Protection Not Necessary 207 



England had excluded American ships from its colo- 
nial ports and had forbidden the importation of 
many American products into its colonies, even if 
taken there in English ships, unless they were 
first exported to England, thus setting us a bad 
example in protectionism, which we followed after 
we gained our independence. But that is another 
story. After the Declaration of Independence our 
states retaliated by duties upon foreign products. 
Commerce between the states was seriously inter- 
fered with by the states, through duties levied on 
each other's products. Indeed, the evils that re- 
sulted therefrom were among the principal causes 
that led to the move for a new Constitution. Mas- 
sachusetts, New Hampshire, Rhode Island, Con- 
necticut, New York, and Pennsylvania thus laid 
duties on each other's products. New Jersey for 
a while tried absolute free trade. All this ended 
with the adoption of the Constitution, with the wise 
provision in Article I, Section 9 : " No tax or duty 
shall be laid on articles exported from any state," 
and ever since then this country has furnished prac- 
tical evidence of the benefits that result from 
absolute free trade. 

The first tariff act was that of 1789. It levied 
specific duties on thirty-six enumerated articles; fif- 
teen per cent ad valorem on carriages; ten per cent 
on seven articles; seven and one-half per cent on 



208 Free Trade vs. Protection 

sixteen; and a general horizontal duty of five per 
cent on all other goods, except seventeen that con- 
stituted the first free list* 

We are told by Taussig, in his Tariff History of 
the United States, p. 15, that the general range of 
duties was not such as would have been deemed 
to be protective in later days, but the intention to 
protect was there. We cannot imagine protectionists 
of our day admitting that any of the above duties 
are protective. 

So few articles were taxed that the whole tariff 
was printed on one sheet of paper about twelve 
inches square, a copy being hung up in each custom 
house. Facsimile reprints should be widely distrib- 
uted now, to show what modest claims protection 
made before it grew to be the voracious monster 
of a later period. Throughout our history, protec- 
tionists have unceasingly clamored for more and 
more protection, but the rate of increase was so 
slow that in 1808 the average tariff duties did not 
exceed thirteen per cent. 

The first tariff had but a short life, for it was 
superseded the next year by a tariff passed in August 
that took effect in December. Another tariff was 
adopted in 1794. Twenty-four acts, making sundry 
changes in duties, were passed between 1794 and 
1 8 16, the details of which we need not go into. 

* Stanwood, American Tariff Controversies in the Nineteenth 
Century, vol. 1, p. 58. 



Protection Not Necessary 209 

Notwithstanding Hamilton's famous Report on 
Manufactures of 1792, now looked upon by pro- 
tectionists as having laid the foundations of protec- 
tion in this country, there was only a slight increase 
in duties during this period. But up to the time of 
the Embargo Act in 1808, even under these low 
duties, manufacturing increased, and it prospered, 
for otherwise it would not have increased. Then it 
did not need protection. Our forbears of that time 
had no surplus capital to use in doubtful experiments. 

A great change took place in 1809, following 
the Embargo and the Non-Intercourse Act, the re- 
sult of the Berlin and Milan decrees of Napoleon 
and the English Orders in Council. Then came the 
war with England in 18 12. All import duties were 
doubled, but this had little effect on the public reve- 
nue, as it was accompanied by the prohibition of 
all intercourse with that country. Manufactures of 
cotton cloth, woolens, iron, glass, pottery, etc., 
sprang into being. The restrictive legislation of 
1808 to 1 8 15 and the war, by cutting off imports, 
was equivalent to extreme protection, while it lasted. 
An impetus was given to these enterprises that 
resulted in a demand for increased protection when 
the war came to an end. Action was necessary, 
as the act doubling the duties on imports was lim- 
ited in operation to one year after the conclusion 
of peace with Great Britain and it would come 
to an end, therefore, February 17, 18 16. An act 



210 Free Trade vs. Protection 

was passed to continue that act until June 30, 18 16, 
and it provided for an additional duty of forty-two 
per cent on the duties which should then exist " until 
a new tariff of duties shall be established by law." 

THE TARIFF OF l8l6 

The brief period of thirty-nine days completed 
the life of the new tariff that went into effect in 
April, 1 8 16. Imported cotton and woolen goods 
were to pay twenty-five per cent until 18 19, and 
thereafter twenty per cent, but in 18 18 the duty of 
twenty-five per cent was extended to 1826, furnish- 
ing an illustration of the fact that it is easier to 
keep up duties and to increase them than it is to 
lower them. Stanwood says: "The fact that man- 
ufacturers were on the spot to guide members in 
coming to a decision is worth noting, inasmuch as it 
seems to have been the first instance of interested 
parties going in person to Washington to promote 
the passage of particular tariff schedules." Further 
on we learn that Webster said he had been assured 
that the manufacturers would be contented with a 
duty of thirty per cent for one year, to which reply 
was made "that the individual consulted by Mr. 
Webster, though intelligent and honorable, was a 
manufacturer of large capital and could better stand 
under the operation of the amendment than many 
others whose means were limited and who had not 



Protection Not Necessary 211 

got well established." Put in plain English, this 
means that there must be protection enough to pro- 
tect the weakest, least efficient manufacturers — that 
is, the pauper manufacturers — while to the most 
efficient manufacturers the protection given by the 
tariff is all profit, since they can make money without 
any tariff. 

THE FIRST " JOKER" 

The tariff of 18 16 is interesting as the first one 
containing a " joker," although the confiding public 
knew not the term in this sense until many years 
later. This consisted of a minimum valuation pro- 
viso " that all cotton cloths or cloths of which cotton 
is the material of chief value (excepting nankeens 
imported direct from China), the original cost of 
which at the place whence imported shall be less 
than twenty-five cents per square yard, shall be taken 
and deemed to have cost twenty-five cents per square 
yard, and shall be charged with duty accordingly." 
Stanwood admits (p. 141), "The effect would be 
a duty of fully one hundred per cent, which, to- 
gether with the freight, insurance, interest, and 
other charges, would operate effectually to keep the 
India goods out of the American market." But he 
makes no mention of the injustice that finally re- 
sulted from this proviso, unforeseen except perhaps 
by the manufacturers who proposed and favored it. 
As even coarse cotton cloth was worth, when this 



212 Free Trade vs. Protection 

measure passed, from twenty-five to fifty cents a 
yard, no burden was at first apparent or felt. But 
when, in the march of improvement, cotton cloth 
was made for less than twenty-five cents a yard and 
the cost kept on diminishing, the burden became 
heavier and heavier, with the usual result to be 
found even now in so many other tariff duties, that 
the poorer classes, the wage earners, were taxed 
more heavily than the richer classes. 

THE GROWTH OF THE COTTON MANUFACTURE 

The first successful attempt to manufacture cotton 
cloth with machinery, such as was then being used 
in England, was made by Samuel Slater at Paw- 
tucket, R. I. He was an Englishman with mechan- 
ical skill and business capacity, who had been 
employed in Arkwright's cotton factory in England. 
It was not allowable to bring over the newly in- 
vented cotton machinery or drawings thereof, but 
Slater brought over knowledge enough in his head 
to enable him, with the financial backing of Brown 
& Almy, merchants in Providence, R. I., to have 
similar machinery made here, and thus cotton spin- 
ning began in this country in 1799. It made but 
slow progress at first, for in 1803 there were only 
four factories in the country. In 1808 four more 
factories were built near Providence, R. I., and in 
1809 there were twenty-five more under construe- 



Protection Not Necessary 213 

tion in New England, fourteen being within thirty 
miles of Providence. In a report upon manufac- 
tures presented to Congress in 18 10 by Albert Gal- 
latin, Secretary of the Treasury, it was shown that 
several manufactures then more than supplied the 
home market, and that the manufactures of iron, 
cotton, wool, flax, and jewelry were firmly estab- 
lished, but most of the cotton, wool, and flax goods 
were still made at home and not in factories. These 
leading industries were, therefore, profitable then 
without protection. 

When the period of restriction began in 1808, 
the importation of foreign goods was impeded and 
soon stopped. As a result the domestic manufac- 
ture increased rapidly. In 1809 there were sixty- 
two cotton factories with 31,000 spindles. In 18 12 
there were fifty factories within thirty miles of 
Providence, with nearly sixty thousand spindles run- 
ning, and with capacity to increase the number to 
one hundred thousand. During the war this growth 
continued and the supply of cotton at the South in- 
creased correspondingly. In 18 15 there were 
500,000 spindles, approximately. It was only the 
spinning that was yet done by machinery, the weav- 
ing being still done on hand looms. Some intima- 
tion of the use of the power loom in England reached 
Francis C. Lowell, and he perfected a machine 
here in 18 14, without any English model, and put 
it in operation in his factory at Waltham, Mass. 



214 Free Trade vs. Protection 

There for the first time, Taussig tells us, the entire 
process of converting cotton into cloth took place 
under one roof and the last important step in giving 
textile manufactures their present form was taken. 

Stanwood says:* 

The tariff of 1816 was not protective, so far as 
those establishments were concerned which had not 
the most efficient machinery. This is almost equiva- 
lent to saying that it was protective in relation to 
but one factory in the country. . . . This was the 
Boston Manufacturing Company, in whose mill at 
Waltham were not only as good and efficient machin- 
ery as that in any English mill, but also some 
devices invented by its bold and enterprising mana- 
gers and employees which were to be found nowhere 
else. ... It paid an annual dividend of 17 per cent 
in 1817; 12.5 per cent in each of the years 1818 
and 1819; 15 per cent in 1820; 20 per cent in 1821 ; 
27.5 per cent in 1822 ; and 25 per cent in each of the 
two following years. Although most of the other 
cotton manufacturers had a great struggle, and 
although many of them passed through bankruptcy, 
yet gradually, by the adoption of the power loom 
and other mechanical improvements in their mills, 
they recovered somewhat. 

I have quoted thus fully from this protectionist 
authority because he shows clearly that even with- 

* American Tariff Controversies in the Nineteenth Century, 
vol. 1, p. 173. 



Protection Not Necessary 215 

out protection manufacturers generally managed to 
get along and " recovered somewhat." If this 
tariff was protective to hardly more than one fac- 
tory in the country, as Stanwood claims, the question 
arises, over how many factories he and his fellow 
protectionists would have a tariff protective? The 
line must be drawn somewhere. Must a tariff be 
protective of the most shiftless, badly managed fac- 
tory? If drawn at any point above that, the tariff 
would not be protective as to all factories below that 
grade of efficiency — and it leaves the lowest class 
of pauper manufacturers besieging Congress for 
enough more protection so that they can carry on 
their unprofitable business with a profit derived 
through the operation of the tariff. Then the theory 
is that the country is to be run with a tariff that will 
enable these pauper industries to live. This is an 
encouragement to shiftlessness and inefficiency, di- 
rectly promotive of reliance upon legislation rather 
than upon energy, improvement, and skill in the 
development of the particular industry. 

It appears from Stanwood's statements * that the 
tariff of 18 16 was not a protective tariff. Inas- 
much as manufacturing continued to increase and to 
prosper under a tariff that was not a real protective 
tariff, this shows that manufacturing had become 
established, succeeded without protection, and, 

* American Tariff Controversies in the Nineteenth Century t 
vol. 1, pp. 155, 156. 



216 Free Trade vs. Protection 

therefore, no longer needed it. Protection granted 
under such circumstances is a mere bounty, a giving 
away of the public funds for nothing in return. 

Stanwood concludes,* u The act of 1 8 16 settled 
nothing and effected little in the direction of pro- 
tecting manufactures. " 

"Consequently the tariff act of 1 8 16 was passed 
prematurely, and it was not only ineffective for the 
purpose avowed when it was under discussion, but 
was not even a successful revenue measure." f 

That is to say, according to this skillful and 
learned protectionist, manufacturing was succeeding 
without protection. 

Stanwood admits that the English goods imported 
in 1816 were of better quality than American goods. 
He says: 

It is no wonder that people took advantage of so 
rare an opportunity to supply their wants. However 
patriotic they may have been, however strong their 
advocacy of home manufactures, sentiment was not 
powerful enough to induce them to neglect the chance 
to buy the foreign goods, most of them of better 
quality than the domestic product, and cheaper.^ 

At the end of the war, in 18 15, when we were 
more or less impoverished, suppose that, moved by 

* American Tariff Controversies in the Nineteenth Century, vol. 

Ii P. 259. 
t Ibid, p. 162. 
t Ibid. v. 160. 



Protection Not Necessary 217 

pity for our condition (as this country has been in 
several instances in the case of other countries since 
then), several of the governments of Europe had 
contributed out of their resources so that the English 
and other nations' goods sent here could have been 
sold at half what we actually paid for them, or 
suppose they had all been given to us outright, would 
it have injured this country to receive them ? Most 
people still suppose that after disaster, losses, pov- 
erty, and suffering, it benefits those who have thus 
suffered to receive assistance, either at diminished 
cost or even without cost 

No one denies that after the close of the war in 
18 15 there was severe depression in cotton manu- 
facturing. But through the operation of the mini- 
mum duty clause and the general introduction of 
power looms, some after the Lowell pattern, some 
after the English pattern, the manufacture soon be- 
came profitable. Taussig says there is abundant evi- 
dence to show that shortly after the crisis following 
the war, the cotton manufacture had fully recovered 
from the depression that followed the war, and that 
the profits were such as to cause a rapid extension 
of the business. Then it did not need more 
protection. 



CHAPTER XIV 

PROTECTION NOT NECESSARY IN THE 
UNITED STATES (Continued) 

EARLY SUCCESS OF MANUFACTURES IN THE UNITED 

STATES 

TN a series of interesting articles on the tariff acts 
-*■ of this country, published in the Providence 
Journal in 19 12, J. B. Bowditch has given us much 
interesting and valuable information, showing that 
in 18 16 the customs duties rose to $36,306,874, or 
more than double the amount received during any 
previous year, and more than was thus received in 
any subsequent year until 1850. With peace came 
a great increase in prices. Cotton doubled in price. 
The first importations of foreign goods yielded 
great profits, but the market was soon glutted and 
prices fell. Many inferior cotton and woolen mills 
were compelled to close. But it is illustrative of 
the value of superior efficiency to note that the 
mills with power looms kept on running at a profit. 
The Waltham Cotton and Woolen Manufacturing 
Company, incorporated in 18 12 with a capital of 
$450,000, and the Boston Manufacturing Com- 
pany, with a capital of $400,000, which built a 

218 



Protection Not Necessary 219 

large cotton mill at Waltham in 18 13, were exam- 
ples of the ability of well-equipped factories to 
withstand foreign competition and a twenty-five per 
cent duty only, at a time when over sixty-one per 
cent of the value of the product of the cotton mills 
was paid out in wages. 

Bishop tells us that the proprietors of this mill 
stated to Congress that they were making a profit 
of twenty-five per cent and stood in no need of 
further protection. But constant applications to 
Congress for more protection were made by the 
owners of poorly equipped mills. These facts prove 
the absurdity of the contention by protectionists that 
the measure of protection afforded must be the dif- 
ference in the cost of production at home and 
abroad. The cost of production at home of which 
mills — of those that can be run at a profit if all 
duties were abolished, or of those that are only 
saved from bankruptcy by a high protective duty? 
The latter are certainly to be appropriately called 
" pauper industries." 

The mills at Nashua were founded in 1823. 
Fall River grew rapidly from 1820 to 1830. 
Lowell, named after the inventor of the American 
power loom, was so successful from its start in 1823 
that in 1824 one of the originators said: "If our 
business succeeds as we have reason to expect, we 
shall have here [at Lowell] as large a population 
in twenty years from this time as there was in 



220 Free Trade vs. Protection 

Boston twenty years ago." John Waterman, who 
collected an assessment of one cent a spindle to pay 
the expenses of an agent to Washington in behalf 
of the interests of the cotton manufacturers, in 
1815, found the number of cotton mills in or near 
Providence to be 170, of which ninety-nine were in 
Rhode Island. At that time, according to Bishop's 
History of American Manufactures, $40,000,000 
had been invested in cotton manufactures, employ- 
ing 100,000 persons, only 10,000 being men above 
seventeen years old. Child labor problems did not 
then disturb manufacturers. The wages paid 
amounted to $15,000,000, or 61.7 per cent of the 
value of the product. It is further noteworthy that 
during this period of a low tariff, the population of 
the country increased faster, although there was but 
little immigration, than it has ever increased under 
high protection, showing that the people were well 
off. The population nearly doubled from 1790 to 
1 8 10. New York increased from 33,000 inhabitants 
to 96,000 during those twenty years; Philadelphia 
increased from 42,000 to 91,000; Baltimore, from 
13,000 to 35,000; and Boston, from 18,000 to 
33,000. 

Bearing in mind that this so-called protective 
tariff was lower than the so-called free trade tariffs 
of 1846 and 1857, and only about one-third as high 
as the abominable Wilson-Gorman tariff of 1894, 
it is evident that the cotton manufacturing business 



Protection Not Necessary 221 

had already become established by 18 15. When a 
new tariff act was called for in 18 16, it was the 
least efficient manufacturers who wanted the high- 
est duties, and it was the most successful ones, like 
Lowell, who were moderate in their demands. This 
is to be borne in mind in examining the claims of 
the hungry horde of pauper manufacturers that 
hastens to Washington every time a change in the 
tariff is under agitation. It is but natural that every 
one of them wants at least that amount of protec- 
tion that will enable him to carry on his otherwise 
losing business at a profit, and they long ago found 
out that by combining they could succeed in getting 
protection enough to save the least efficient of their 
number, while saving dissension among themselves 
and opposition from each other. The vultures and 
jackals over the carcass take, each one, what he can, 
instead of fighting each other. 

Taussig mentions the fact that careful and self- 
reliant men, like the founders of the Waltham and 
Lowell enterprises, were the most urgent in advising 
the adoption of low rates in 18 16, but this was 
before protection seekers had found out the 
advantage to be gained by combining. 

In his desire to be impartial and to sum up in 
a judicial manner, Taussig is rather inconsistent, for 
he says: u On the whole, although the great im- 
pulse to the industry [cotton manufactures] was 
given during the war, the duties on cottons in the 



222 Free Trade vs. Protection 

tariff of 1 8 16 may be considered a judicious appli- 
cation of the principle of protection to young indus- 
tries;" and yet he says: "The duties of the tariff 
of 1816, therefore, can hardly be said to have been 
necessary." In concluding his examination of the 
subject, he says:* 

Before 1824, the manufacture, as we have seen, 
was securely established. The further application of 
protection in that and in the following years, was 
needless, and, so far as it had any effect, was harm- 
ful. The minimum valuation was raised in 1824 to 
thirty cents, and in 1828 to thirty-five cents. The 
minimum duties were thereby raised seven and one- 
half and eight and three-quarters cents, respectively. 
By 1824 the manufacture had so firm a hold that its 
further extension should have been left to individual 
enterprise, which by that time might have been relied 
upon to carry the industry as far as it was for the 
economic interest of the country that it should be 
carried. 

COTTON MANUFACTURES HAVE NEEDED NO IN- 
CREASED PROTECTION IN THIS COUNTRY FOR 
THE LAST THREE-QUARTERS OF A CEN- 
TURY OR MORE 

Upon a careful, deliberate examination of the 
facts, I can see no escape from the conclusion that 

* Tariff History of the United States, p. 35. 



Protection Not Necessary 223 

for more than three-quarters of a century cotton 
manufacturing has needed no increased protection 
in the United States. The position of our country 
as the best in the world in which to raise cotton 
has been acknowledged for a century or more. So 
has the Yankee ingenuity in inventing machinery 
whenever there is a call for it. And, lastly, the 
abundant supply of water power in the numerous 
valleys of New England enabled us to obtain the 
power needed, at a minimum cost. Further, ade- 
quately equipped and well managed mills have 
always succeeded, even when they had what pro- 
tectionists tell us was inadequate protection. Cotton 
manufacturers have needed no increased protection 
in this country for nearly a century. 

The ingenuity and inventiveness of American 
mechanics have become traditional, and the names 
of Whitney and Fulton need only be mentioned to 
show that these qualities were not lacking at the 
time we are considering. The presence of such men 
rendered it more easy to remove the obstacles arising 
from want of skill and experience in manufactures. 
The political institutions, the high average of intelli- 
gence, the habitual freedom of movement from place 
to place and from occupation to occupation, also 
made the rise of the existing system of manufactur- 
ing production at once more easy and less dangerous 
than the same change in other countries.* 

* Taussig, Tariff History of the United States, p. 62. 



224 Free Trade vs. Protection 

INCREASED PROTECTION TO COTTON INDUSTRIES IN 
1824 WAS UNNECESSARY 

Taussig tells us that by 1824 the cotton industry 
was firmly established and almost independent of 
support by duties. 

Mr. Nathan Appleton, who was a large owner of 
cotton factory stocks, and who was also, in his time, 
one of the ablest and most prominent advocates of 
protective duties, said in 1833 that at that date coarse 
cottons could not have been imported from England 
if there had been no duty at all, and that even on 
many grades of finer goods competition was little 
to be feared. In regard to prints, the American 
goods were, quality for quality, as cheap as the 
English, but might be supplanted, in the absence of 
duties, by the poorer and nominally cheaper English 
goods — an argument often heard in our own day, 
which obviously puts the protective system on the 
ground of regulating the quality of goods for con- 
sumers. The general situation of the cotton manu- 
facture, as described by Appleton, was one in which 
duties had ceased to be a factor of much importance 
in its development. 

FURTHER PROOF THAT COTTON MANUFACTURING 

WAS FIRMLY ESTABLISHED AND NEEDED NO 

INCREASED PROTECTION 

The Waltham Cotton Mill began business before 
the close of the War of 18 12. It was the best 



Protection Not Necessary 225 

equipped cotton mill in the world when the tariff 
of 18 16 was passed, paying big dividends. Some 
of its stockholders, with other capitalists, built a 
large cotton mill at East Chelmsford, Mass., now 
Lowell, in 1822, under the name of the Merrimac 
Manufacturing Company. It began in 1823 with 
a capital of $1,200,000, and paid a dividend of 
$160 a share in 1825. Writing in 1864, Bishop 
said that this company has continued since 1825, 
with few intermissions, to divide about twelve per 
cent annually. It employed 500 operatives in 
1822, nearly all Americans, and exported sheetings 
and shirtings to South America in competition with 
British fabrics. It will be urged by protectionists 
that it is not fair to pick out and cite a few instances 
of the most successful ventures in the cotton in- 
dustry. It is precisely such instance's that show 
what the state of the industry was when efficiently 
managed. With the same management in the other 
mills, they too could succeed, and therefore the 
industry was beyond the need of increased protec- 
tion. Then and there a beginning should have been 
made in reducing the protection given instead of 
increasing it. 

FURTHER PROOF THAT THE COTTON INDUSTRY NO 
LONGER NEEDED PROTECTION 

Notwithstanding the pendency of the Compro- 
mise Tariff of 1833, large investments continued to 



226 Free Trade vs. Protection 

be made in cotton mills then and later, after the 
act passed. In 1835 the Amoskeag Company began 
operations on a large scale in Manchester, N. H. 
The first Stark Mills were built there in 1838 and 
the second mills in 1839. Although depression in 
the business checked growth awhile, it did not pre- 
vent further investments even before the act of 
1842. In a work by Robert Montgomery in 1840, 
he reached the same conclusions that have been 
reached since by competent observers, that money 
wages were about twice as high here as in Europe, 
but the product per spindle and per loom was con- 
siderably greater. The result of elaborate tables 
was a difference of three per cent in favor of Ameri- 
can manufactures. The industry was successful and 
needed no protection. Nevertheless, more protec- 
tion was given in 1842 and of course manufacturers 
increased their profits. It is not claimed that this 
was entirely due to the duties. Cotton was lower, 
so that here as well as in Europe there was more 
profit in the business. It had outgrown any need 
of protection. 

THE GROWTH OF THE WOOLEN INDUSTRY IN THE 
UNITED STATES 

Unlike cotton, wool varies greatly in quality, 
character, and length of fiber, and the demand is 
greater than the supply. It has to be carefully 



Protection Not Necessary 227 

sorted by hand before it can be used in manufac- 
turing. Some wools can be successfully raised in 
the United States, others cannot. Following their 
usual theories, protectionists were of course led to 
maintain that all wools used for making cloth in 
the United States must be raised in the United 
States, no matter what natural obstacles and reasons 
may stand in the way and no matter if it would be 
economic wisdom to raise some kinds of wool else- 
where and to take them in exchange for American 
products more economically raised or made here. 
The way to make this theory actual fact was, of 
course, through protective custom-house taxation — - 
that is, by taxing all imported wools, no matter 
whether they could be successfully produced here or 
not. The result has been a burden on the woolen 
manufacturers and, through them, on all consumers. 
On home-raised wools they have had to pay the 
natural price plus the tariff tax, or just as little 
below that price as would keep out the same wool 
raised abroad. On the foreign wools not found 
practicable to raise here woolen manufacturers and 
consumers have to pay the foreign price plus the 
tariff. It will be seen at once that all the tax paid 
on wool actually imported goes into the treasury of 
the United States, while all the extra price paid to 
the raisers of wool in this country in consequence of 
the artificial price due to the tariff goes into the 
pockets of the home raisers — out of the pockets of 



228 Free Trade vs. Protection 

the consumers. To compensate the woolen manu- 
facturers for both, the protection theory required 
and obtained a custom-house duty on woolen cloths 
high enough to limit materially their importation. 
To carry out their theory protectionists should have 
insisted upon absolutely prohibitory duties, but they 
have not succeeded in outraging the common sense 
of the American people to that extent. 

WOOLEN MANUFACTURING AND THE TARIFF 

Although we have not full accounts of the early 
history of the manufacture of woolen goods in the 
United States, we have enough to show us that the 
general course of events was like that in cotton man- 
ufacturing. Both spinning and weaving continued 
to be done on the spinning wheel and the hand loom 
even after Arthur and John Scholfield, from Eng- 
land, established a factory at Byfield, Mass., in 
1794, introducing machinery for carding wool and 
for dressing (fulling) woolen goods. Development 
was impeded by the deficient supply and poor quality 
of wool. This was remedied by the importation 
from Spain of fine merino sheep in 1802 and later. 
By 1 8 10 the carding and spinning of wool by ma- 
chinery was begun in some of the cotton mills of 
Rhode Island. In Taft's Notes there is mention of 
the Peacedale Manufacturing Company, which be- 
gan in 1804 and is still in active operation. It is 



Protection Not Necessary 229 

said that the spinning jenny was first applied to wool 
in this factory. A rough estimate, the best that 
could be made in the absence of better data, in 
Bulletin of Wool Manufacturers (486) states 
that the value of woolen goods made in factories 
rose from four million dollars in 18 10 to nineteen 
million dollars in 18 15. Renewed heavy importa- 
tion of English goods after the war interfered with 
our home manufactures and showed that the duties 
were not protective. The tariff of 18 16, therefore, 
raised them, making them the same as those on cot- 
ton goods, twenty-five per cent, to be reduced in three 
years to twenty per cent in 18 19. But before 18 19 
came, this reduction was postponed and it was never 
made, furnishing us with illustration of the diffi- 
culty of reducing the tariff rates through horizontal 
reduction, for there is always an active body of 
interested manufacturers to see to it that the pro- 
posed reduction is postponed, or abandoned, while 
there is no organized body to see to it that the reduc- 
tion is continued. In this tariff (of 18 16) there was 
no minimum-valuation clause for woolen, as there 
was for cotton goods; hence, later, there was less 
protection for woolens than for cottons. The duty 
on imported wool was fifteen per cent. It will be 
seen that this tariff afforded only slight protection to 
woolen manufacturers. Taussig says that the pro- 
visions of the tariff act of 1824 did not materially im- 
prove their condition. Under it the duty on woolen 



230 Free Trade vs. Protection 

goods was raised to thirty per cent, and to thirty- 
three and one-third per cent after 1825. This was 
counterbalanced by raising the duties on imported 
wool from twenty per cent to twenty-five per cent 
after 1825, and to thirty per cent after 1826, except 
on wool costing ten cents a pound or less. Ever 
since 18 16 wool has been imported to supplement 
the domestic supply, and, therefore, the protection 
may be allowed not to have been excessive from the 
protectionist point of view. The woolen manufac- 
ture continued to increase steadily and in 1828 was 
securely established. 

HIGHER DUTIES SOUGHT 

In 1823 the woolen manufacturers of Boston 
organized to promote the securing of higher pro- 
tective duties, which were not needed. The testi- 
mony given in 1828 by woolen manufacturers before 
a Committee on Manufactures of the House of Rep- 
resentatives proved this clearly. It showed that the 
difficulties arising from lack of skill and experience 
and other such temporary obstacles no longer had 
influence in preventing the growth of this industry. 
One manufacturer testified that the application of 
the power loom to weaving woolens had been made 
in the United States earlier than in England. This 
is hardly remarkable when we take into account 
the superior American ingenuity in invention and 



Protection Not Necessary 231 

in the use of machinery, as had already been illus- 
trated by Eli Whitney's invention of the cotton gin. 
The opinion was expressed by several [witnesses] 
that the mere cost of manufacturing was not greater 
in the United States than in England: that the 
American manufacturer could produce at as low 
prices as the English, if he could obtain his wool 
at as low prices as his foreign competitor. 
One manufacturer said at this hearing: 

The high prices we pay for labor are, in my 
opinion, beneficial to the American manufacturer, 
as for those wages we get a much better selection of 
hands, and those capable and willing to perform a 
much greater amount of labor in a given time. The 
American manufacturer also uses a larger share of 
labor-saving machinery than the English. 

This is interesting because it adumbrates what 
now has been clearly proved — that is, that, owing 
to the superior efficiency of the American workman, 
the cost of labor per unit is often lower than in 
Europe, although we pay so much higher day wages. 
Taussig's conclusions are so convincing, yet put so 
judicially after weighing all the facts, that I will 
repeat them. He says:* 

This testimony seems to show conclusively that at 
the time when it [protection] was given, the woolen 

* Tariff History of the United States, p. 43. 



232 Free Trade vs. Protection 

manufacture had reached that point at which it 
might be left to sustain itself: at which accidental 
or artificial obstacles no longer stood in the way of 
its growth. That many of the manufacturers them- 
selves wanted higher duties, is, for obvious reasons, 
not inconsistent with this conclusion. Progress had 
been less certain and rapid than in the case of the 
kindred cotton manufacture, for the conditions of 
production were less distinctly favorable. The dis- 
placement of the household products by those of the 
factory was necessarily a gradual process, and made 
the advance of the woolen manufacture normally 
more slow than that of the kindred industry. But 
the growth of the cotton manufacture, so similar to 
that of wool, of itself removed many of the obstacles 
arising from the recent origin of the latter. The use 
of machinery became common, and, when the first 
great steps had been taken, was transferred with 
comparative ease from one branch of textile produc- 
tion to another. In 1828, when for the first time 
heavy protection was given by a complicated system 
of minimum duties, and when the actual rates rose, 
in some cases, to over one hundred per cent, this aid 
was no longer needed to sustain the woolen manu- 
facture. The period of youth had then been passed. 

In one respect woolen manufacturing has been 
under a difficulty in this country that cotton manu- 
facturing has escaped, i. e., early in the development 
of cotton manufacturing it was settled that this coun- 
try was to become the great source of supply of cot- 



Protection Not Necessary 233 

ton, and, consequently, it was not necessary to "pro- 
tect" it by a duty on imported cotton, as little was 
imported. But the woolen industry has had to suffer 
from the efforts of protectionists to increase the pro- 
duction of wool in this country by duties on the dif- 
ferent grades of imported wool that were not, and, 
perhaps, could not be, successfully raised in this 
country, although the manufacturers must have 
them to produce certain kinds of woolens. 

USELESS TO UNDERTAKE TO PROTECT WOOL 

The fact is, the protective dogma has not, and 
probably never can, make good in wools and wool- 
lens. It is one of those cases where we can use land, 
time, labor, and money to better advantage. The 
doctrine of protection, as well as common humanity 
and common sense, orders the gradual but steady 
wiping out of all duties on everything necessary to 
the health and comfort of the people, unless, in a 
reasonable time, these duties can supply us better 
and cheaper goods than we can buy in the world 
market.* 

Other portions of the world are better fitted 
by nature than we are to raise wool, and, after 
taking nearly a century to find this out, it would be 
well now for us to accept the situation. 

* Tarbell, The Tariff in Our Times, p. 333. 



CHAPTER XV 

PROTECTION NOT NECESSARY IN THE 
UNITED STATES (Continued) 

THE GREEDINESS OF PROTECTIONISTS. THE HARRIS- 
BURG CONVENTION 

HP HE woolen bill having failed of passage in 
"■- 1827, a national convention of protectionists 
was called to promote protection, principally of the 
woolen industry, incidentally of other industries, as 
a means to gain strength. About one hundred per- 
sons, mostly manufacturers, met at Harrisburg in 
response to the call. They asked for even higher 
duties on woolens than the bill of the same year 
had provided. The ad valorem duty on woolen 
goods was to begin with forty per cent, to be raised 
gradually to fifty per cent. It was to be assessed 
on minimum valuations of fifty cents, $2.50, $4.00 
and $6.00 a yard. The duty on wool was to be 
twenty cents a pound, to be raised each year two 
and one-half cents until it should reach fifty cents 
a pound. Of course, such duties would stop all 
importation long before this limitation. The woolen 
manufacturers thus showed their inordinate greed 
in asking for more than could be expected to be 

234 



Protection Not Necessary 235 

given to them, when their industry was already well 
established and needed no increased protection even 
under the principles of the protectionists' own creed. 

MORE PROTECTION WANTED 

To overcome or prevent the importation of these 
English woolens it was sought, in 1826, to apply the 
principle of the cotton " joker," known as the mini- 
mum-valuation system. Meetings were held in Boston 
of the woolen manufacturers. The legislature passed 
resolutions, which were presented to the House in 
Washington by Webster, asking for further protec- 
tion of woolens. A committee was sent on to present 
the matter before the Committee on Manufactures, 
and a bill was reported giving the manufacturers all 
they asked for. But the bill met with strong resist- 
ance by the opponents of protection. To give an 
example : the duty on goods worth about forty cents 
a yard would be thirteen and one-third cents if the 
value was less than forty cents, but would be eighty- 
three and one-third cents if the value was more than 
forty cents. If the value could be made to appear 
to be less than forty cents, the importer would save 
seventy cents a yard in duties. 

On the other hand, the system had the want of 
elasticity which goes with specific duties. All goods 
costing between forty cents and $2.50 were charged 
with the same duty, so that cheap goods were taxed 



236 Free Trade vs. Protection 

at a higher rate than dear goods. The great gap 
between the first and second minimum points (forty 
cents and $2.50) made this objection the stronger. 
But that gap was not the result of accident. It was 
intended to bring about a very heavy duty on goods 
of the grade chiefly manufactured in this country. 
The most important domestic goods were worth 
about a dollar a yard, and their makers, under this 
bill, would get a protective duty of eighty-three and 
one-third cents a yard. The object was to secure a 
very high duty, while retaining nominally the existing 
rate of thirty-three and one-third per cent.* 

The dishonesty of such a procedure is apparent 
at a glance. Although the bill failed of passage that 
year, it became incorporated, in substance, in the 
tariff of 1828, but with an important change, the 
insertion of a minimum point of $1.00, the Harris- 
burg scheme having provided no break between 
forty cents and $2.50; and the rates were made 
specific instead of ad valorem. That is to say, 
woolen cloths worth over a dollar a yard were taxed 
at the rate of the next minimum — that is, as if they 
cost two dollars and a half a yard, irrespective of 
their actual cost. To escape this the natural tend- 
ency was to invoice these goods so as to bring their 
value under one dollar a yard. This incentive to 
undervaluations and false invoices has always led to 
disputes at the custom house. Instead of learning 

* Taussig, Tariff History of the United States, p. &2. 



Protection Not Necessary 237 

through experience that all such sharp attempts of 
the law to make a duty appear to be less than it 
actually is, are wrong, from that day to this tariff- 
makers have worked this same trick and the same 
or similar false discriminations still are to be found 
in the duties on certain kinds of wool and woolens. 
The custom-house authorities still make the same 
old complaints they made eighty years and more ago 
of the depravity of the foreign exporter, although 
he may be only the agent of the real party, perhaps 
an American in this country. Inspectors and ap- 
praisers still make the same old attempts to enforce 
the rigid provisions of the law, through close inspec- 
tion and infliction of severe penalties. Protection- 
ists cannot be made to see that improvement can best 
be made through simplification, elimination of false 
discriminations in minimum duties, and a gradual 
progressive reduction of these antiquated and unnec- 
essary provisions of the tariff. 

NO NECESSITY FOR INCREASED PROTECTION OF WOOL 
OR WOOLEN MANUFACTURES FOR THREE- 
QUARTERS OF A CENTURY 

It appears that direct protective legislation had 
even less influence in promoting the introduction and 
early growth of the woolen than of the cotton manu- 
facture. The events of the period of restriction 
from 1808 to 1815 led to the first introduction of 



238 Free Trade vs. Protection 

the industry and gave it the first strong impulse. 
These events may indeed be considered to have been 
equivalent to effective, though crude and wasteful, 
protective legislation, and it may be that their effect, 
as compared with the absence of growth before 1808, 
shows that protection in some form was needed to 
stimulate the early growth of the woolen manu- 
facture. But by 181 5 the work of establishing the 
manufacture had been done. The moderate duties 
of the period from 1816 to 1828, partly neutralized 
by the duties on wool, may have something to sus- 
tain it; but the position gained in 1815 would hardly 
have been lost in the absence of these duties. By 
1828, when strong protection was first given, a 
secure position had been reached.* 



Here, then, was an instance where the " moderate 
and temporary protection" that protectionists have 
told us is all they want had been granted and the 
industry had become established. Yet then, as ever 
since, the cry was, and still is, for more and more 
protection. 

As in the cotton industry, there is no escape from 
the conclusion that, judged by the conditions laid 
down by Mill and always fondly urged and relied 
upon by protectionists, the manufacture of woolens 
was an accomplished fact, an established industry, so 
many years ago that for more than three-quarters of 

* Taussig, Tariff History of the United States, p. 45. 



Protection Not Necessary 239 

a century it has not needed any increase in protec- 
tion, and, with free wool, has not needed any pro- 
tection. 



CERTAIN FACTS ABOUT WOOL AND WOOLENS 

Woolen cloth has long been thought to be the best 
material for clothing. But for years " protection" 
has tended to substitute cheap and poor substitutes, 
especially for the laboring classes. Cotton, which 
is an inferior article for clothing, has been taking 
the place of wool, because of the increase in the cost 
of woolen goods caused by our protective tariffs. 
Wool men deceive or mislead us when they tell us 
that seventy per cent of the wool we use in making 
woolen goods is produced at home, by figuring on 
domestic wool before the grease is taken out and by 
comparing this with imported woolen goods made 
of wool from which the grease was taken out before 
it was made into the cloth imported. In 1909 our 
woolen manufacturers used thirty-seven per cent of 
domestic wool to sixty-three per cent of foreign 
wool. The tariff duty has kept out the best wool 
with grease in it by taxing it, grease and all, while 
it makes domestic wool like it too dear to buy for 
use in its place. 

There are two classes of woolen goods, carded 
and worsted, and they call for different kinds and 



240 Free Trade vs. Protection 

grades of wool, the proper use of which is interfered 
with, and sometimes prevented, by the artificial dis- 
tinctions of our " protective M tariffs, with the result 
that some woolens are " protected" out of existence, 
while others are fostered into a hot-house excess of 
production until cut down by some unexpected tariff 
change secured in Washington through some hostile 
influence, often working in secret. After thus tax- 
ing certain kinds of wool so much that woolen 
manufacturers could not use them, and thus stimu- 
lating the use of imported substitutes in their place, 
they, too, were thus taxed, and cotton was forced 
to be used in their place. From 1890 to 1905 
the use of cotton in clothing increased about one 
hundred per cent, while the use of wool in clothing 
increased only about twenty-five per cent. In 1890 
we used 8.75 pounds of wool per capita of our pop- 
ulation. In 1904 we used only 6.22 of wool per 
capita. It must be admitted, however, that this is 
not all due to the tariff; but, nevertheless, the tariff 
has been the principal cause of this diminishing use 
of wool for clothing, especially among the working 
classes. For the cheaper the goods, the higher have 
been the tariff rates on woolens, with the result that 
the poor pay the most of the tax or the increased 
price of the domestic goods. It may be said gener- 
ally that the tariff makes woolen cloth cost the con- 
sumer in the United States twice as much as it costs 
him in England. 



Protection Not Necessary 241 



GROWTH OF THE IRON MANUFACTURE 

As the process of conversion of crude iron into 
tools, etc., had already been mastered in this country 
during our colonial period, it needed no protection 
when we became independent. Therefore, the con- 
troversy as to the necessity of protection in the iron 
industry has been confined mainly to the production 
of pig iron and bar iron. During our colonial period 
England was using more iron than was produced at 
home, and, consequently, she encouraged the pro- 
duction in these colonies. About 1750 coke from 
soft coal in the blast furnace began to take the 
place of charcoal in England, followed by improve- 
ments there in puddling and rolling. Production 
increased slowly from a small scale to a large scale. 
In this country old processes continued in use, there 
being no lack of forests for the charcoal required. 
The war of 18 12 stimulated production, followed, 
when peace came, as in the case of the textile indus- 
tries, by heavy importation of iron at low prices. 
This led to protective duties by Congress in 18 16, 
which were increased in 18 18, and again in 1824 
and 1828, and were reduced in 1832. In 18 16 
Congress undertook to ward off the competition of 
the cheaper rolled iron produced in England by 
improved methods by a heavy discriminating duty 
which in 1828 was equivalent to one hundred per 



242 Free Trade vs. Protection 

cent. It appeared in the tariff acts of 1832 and 
1842 and did not end until 1846. Taussig says:* 

The real motive for maintaining the heavy tax 
through these years undoubtedly was the unwilling- 
ness of the domestic producers to face the competi- 
tion of the cheaper article. The tax is a clear illus- 
tration of that tendency to fetter and impede the 
progress of improvement which is inherent in pro- 
tective legislation. It laid a considerable burden on 
the community, and, as we shall see, it was of no 
service in encouraging the early growth of the iron 
industry. 

Our relative advantage over England because of 
our forests, that supplied us with charcoal, dimin- 
ished as coke took the place of charcoal in producing 
iron in England, and as our own supply became 
diminished through the destruction of our forests as 
our population increased. 

Russia and the Scandinavian countries, with their 
immense forests and their redundant population, 
willing to work at low returns, kept up the supply of 
excellent hammered iron at lower prices than it 
could be produced here, although we had a high 
protective duty. Taussig says that as importations 
continued on a considerable scale the price of iron 
made here was clearly raised over the price of the 
foreign iron by the amount of the duty, with the 

* Tariff History of the United States, p. 53. 



Protection Not Necessary 243 

result that the users of iron here paid the duty, 
whether the iron was of foreign or domestic origin, 
in prices from forty to one hundred per cent higher 
than foreign prices. 

The fact that the manufacturer, notwithstanding 
the heavy and long-continued protection which it 
enjoyed, was unable to supply the country with the 
iron which it needed, is of itself sufficient evidence 
that its protection as a young industry was not 
successful. It is an essential condition for the useful- 
ness of assistance given to a young industry, that the 
industry shall ultimately supply its products at least 
as cheaply as they can be obtained by importation; 
and this the iron manufacture failed to do.* 

In spite of protection — perhaps because of pro- 
tection, for it benefited the inefficient ironmakers 
and, hence, delayed their adoption of better methods 
— pig iron continued to be made in this country 
only with charcoal. Better methods were not used 
until after the Compromise Tariff Act of 1833 was 
passed, with steadily decreasing duties. 

DUTY ON IRON A HEAVY TAX ON CONSUMERS 

No better illustration can be given of the baleful 
influence of protection in protecting inefficiency and 
delaying the adoption of improved methods. So 
poorly were our protected iron manufacturers 
equipped that when railroad building began they 

* Tariff History of the United States, p. 56. 



244 Free Trade vs. Protection 

could not supply the rails. In 1832 Congress pro- 
vided that duties on all rails imported within three 
years should be refunded, and under this act our 
first railroads escaped all duties on their imported 
rails. It was not until duties reached almost their 
lowest point that the iron manufacturers of this 
country used anthracite coal in their blast furnaces. 
It was the cessation or absence of protection that 
drove them to the use of anthracite under a patent of 
1833. This important discovery led to great devel- 
opment of iron manufacture, and its production on a 
great scale began, due, not to protection, but to the 
adoption of better methods of production. Through 
our anthracite coal this country gained an advantage 
over England in the production of iron that did 
away with any claim that the industry needed pro- 
tection. Taussig, in his impartial way, sums up the 
situation as follows : * 

It seems clear that no connection can be traced 
between the introduction and early progress of the 
iron manufacture and protective legislation. • . . 
After 1 8 15 the new regime in the iron trade had 
begun : the use of coke in the blast furnace, and 
the production of wrought iron by puddling and 
rolling had changed completely the conditions of 
production. The protective legislation which began 
in 1818 and continued in force for nearly twenty 

* Tariff History of the United States, p. 57. 



Protection Not Necessary 245 

years, was intended, it is true, to ward off rather 
than to encourage the adoption of the new methods ; 
but it is conceivable that, contrary to the intentions 
of the authors, it might have had the latter effect. 
No such effect, however, is to be seen. During the 
first ten or fifteen years after the application of 
protection, no changes of any kind took place. Late 
in the protective period, and at a time when duties 
were becoming smaller, the puddling process was 
introduced. The great change which marks the 
turning point in the history of the iron manufacture 
in the United States — the use of anthracite — began 
when protection ceased. It is probably not true, as 
is asserted by advocates of free trade — e. g., Gros- 
venor, p. 197 — that protection had any appreciable 
influence in retarding the use of coal in making 
iron. ... It is hardly probable, therefore, that 
protection exercised any considerable harmful influ- 
ence in retarding the progress of improvement. But 
it is clear, on the other hand, that no advantages 
were obtained from protection in stimulating prog- 
ress. No change was made during the period of 
protection which enabled the country to obtain the 
metal more cheaply than by importation, or even as 
cheaply. The duties simply taxed the community; 
they did not serve to stimulate the industry, though 
they probably did not appreciably retard its growth. 
We may therefore conclude that the duties on iron 
during the generation after 1815 formed a heavy tax 
on consumers; that they impeded, so far as they 
went, the industrial development of the country ; and 



246 Free Trade vs. Protection 

that no compensatory benefits were obtained to offset 
these disadvantages.* 

PRACTICAL RESULTS OF HEAVY DUTY 

From 1830 to 1842 all railroad iron was admitted 
to this country free of duty. It was the beginning 
of our system of railroads and the larger part of all 
iron imported consisted of rails for these roads. 
There was a heavy discriminating duty on rolled bar 
iron from 18 18 to 1846 (except during a few 
months in 1842) of about one hundred per cent. 

Its effect was neutralized in part by the free 
admission of railroad iron, which was one form of 
rolled iron; but so far as it was applied to rolled 
iron in general, it simply prevented the United States 
from sharing the benefit of a great improvement in 
the arts. It had no effect in hastening the use of the 
puddling and rolling processes in the country.f 

The folly of the kind of protection that kept a 
good article out of the country and forced Amer- 
icans to use a poor article in its place at a high price 
is shown conclusively and forcibly by the language 
used by Gallatin in 1831 : 

To persist, in the present state of the manufacture, 
in that particular competition, and for that purpose 
to proscribe the foreign rolled iron, is to compel the 

* Taussig, Tariff History of the United States, pp. 53, 55, 57 
et seq. 
fTaussig, Ibid, p. 127. 



Protection Not Necessary 247 

people for an indefinite time to substitute a dear for 
a cheap article. It is said that the British iron is 
generally of inferior quality : this is equally true of 
a portion of that made in America. In both cases 
the consumer is the best judge — has an undoubted 
right to judge for himself. Domestic charcoal iron 
should confine itself to a competition with the foreign 
iron made from the same fuel. 

In 1840 anthracite coal began to be applied in 
this country to the making of pig iron. This was 
because of the introduction of the hot blast. About 
the same time (1842) the tariff imposed heavy 
duties on all kinds of iron, including railroad iron. 
Consequently the production of iron increased rap- 
idly through this combination of causes, of which 
the use of anthracite coal by the hot blast method 
was enough, without any increase of protection. As 
Taussig says, " Some part of this great growth was 
certainly due to the high protection of 1842; but, 
under any circumstances, the use of anthracite would 
have given a great stimulus to the iron trade." In 
other words, protection was unnecessary. 

The use of anthracite was in itself protection, and 
all the protection the industry needed or should have 
received, for this country has a practical monopoly 
in anthracite. Its use for producing all kinds of 
iron, pig iron, rolled iron, railroad iron, etc., in- 
creased rapidly. It was first used in puddling and 
reheating about 1845, and in nine years (1856) the 



248 Free Trade vs. Protection 

production of rolled iron was nearly five hundred 
thousand tons. 

Taussig sums up the situation of iron as follows:* 

The high duty on iron in its various forms between 
1832 and 1841, and again in 1842-46, impeded impor- 
tation, retarded for the United States that cheapen- 
ing of iron which has been one of the most important 
factors in the march of improvement in this country, 
and maintained in existence costly charcoal furnaces 
long after that method had ceased in Great Britain 
to be in general use. The first step towards a vigor- 
ous and healthy growth of the iron industry was in 
the use of anthracite in 1840. That step, so far from 
being promoted by the high duties, was taken in a 
time when duties were on the point of being reduced 
to the twenty per cent level. Hardly had it been 
taken when the high duties of the tariff act of 1842 
brought about (not indeed alone, but in conjunction 
with other causes) a temporary return to the old 
charcoal process. A number of new charcoal fur- 
naces were built, unsuited to the industry of the time 
and certain to succumb before long. 

No better illustration can be given of the fact 
stated, that protection prevents the introduction of 
new, improved methods and machines and thereby 
favors the inefficient. Taussig concludes: 

♦Taussig, Tariff History of the United States, p. 134. 



Protection Not Necessary 249 

On the other hand, the lower duties did not pre- 
vent a steady growth in the making of anthracite 
iron: while the production of railroad iron and of 
rolled iron in general, also made possible by the use 
of anthracite, showed a similar steady progress. 
There is no reason to doubt that, had there been no 
duty at all, there would yet have been a large pro- 
duction of anthracite pig and rolled iron. Mean- 
while the country was rapidly developing and needed 
much iron. The low duties permitted a large impor- 
tation of foreign iron, in addition to a large domestic 
production. The comparative cheapness and abun- 
dance of so important an industrial agent could not 
have operated otherwise than to promote material 
prosperity.* 

♦P. 135. 



CHAPTER XVI 

PROTECTION NOT NECESSARY IN THE 
UNITED STATES (Continued) 

PROTECTION RETARDING ADOPTION OF BETTER 
PROCESSES 

O TANWOOD admits that a considerable part of 
^ the disadvantage under which American iron- 
makers labored was due to their neglect to make use 
of the improved process and the coke fuel that im- 
parted a prodigious stimulus to the English manu- 
facture, while seeking to excuse it by the great dis- 
tances between the known iron deposits, the coal, 
and the iron market, the poverty of the ironmakers, 
and the small scale on which they worked. In other 
words, ironmaking deserved help (protection) be- 
cause it was a pauper industry, by which I mean that 
it was an unprofitable industry. This brings us back 
to the same old question, whether the money of the 
people, taken from them through taxation, is to be 
used to prop up a losing business until that indefinite 
time that, after more than a century, we have not yet 
reached, when the business can stand on its own feet, 
without entailing further hardship on the people. 
What industry is there that, after protection for a 

250 



Protection Not Necessary 251 

century and a quarter, admits that it can now stand 
without protection? What industry ever will ad- 
mit it? 

It appears, then, that, according to the statement 
of this fair-minded protectionist, Stanwood, that all 
the iron manufacture needed to make the industry 
successful in this country was the adoption of better 
methods. He admits, although attempting to qual- 
ify it, that, " It may well be true that the effect of the 
protective duty was to postpone for a longer time 
than would otherwise have been the case the adop- 
tion of the improvements introduced in England." 

It is plain common sense to maintain that when 
an industry reaches such a condition that all it needs 
in order to succeed is the adoption of well-known, 
improved methods, it needs no protection. 

THE BESSEMER PROCESS 

In 1856 Sir Henry Bessemer invented the Bes- 
semer process for making iron and steel. It was of 
enormous industrial importance, because it reduced 
the cost materially. Its essential principle was the 
oxidizing of the carbon in cast iron by forcing a 
blast of air through a mass of the molten metal. 
Bessemer's licensees under his patents were not suc- 
cessful at first, so he continued his experiments, and, 
failing to induce others to use his inventions, he built 
works of his own in Sheffield, England; was success- 



252 Free Trade vs. Protection 

ful, and kept on enlarging them until other steel 
producers found he was underselling them by nearly 
a hundred dollars a ton. Applications for licenses 
followed; Bessemer received more than five million 
dollars in royalties and was knighted by the Queen. 

IRON INDUSTRY NEEDED NO PROTECTION 

At this time and during the Civil War, and our 
adoption, step by step, of high protection, every- 
thing was favorable to the production of iron and 
steel in the United States. We had and have un- 
limited supplies of the best ores and coal, and the 
processes of manufacture were well known and 
established. As in England, the Bessemer process 
had revolutionized the industry and lowered the cost 
of production. None of the conditions requiring 
protection existed, and, therefore, there was no need 
of protection. The ever-increasing protection given 
to the industry for many years was purely a gift to 
clamorous, insatiate mendicants. Had there been 
no change in the iron and steel schedules since the 
Walker tariff, the industry would have developed as 
well as it has under protection, we would have had 
cheaper iron and steel, possibly even American-built 
iron ships, the profits of the business would have 
been more evenly divided, and we would have been 
spared the infliction of our crop of Pittsburgh mil- 
lionaires. 



Protection Not Necessary 253 

The iron and steel industries of this country were 
well established, successful industries before our 
Civil War, and became such in spite of protection, 
not in consequence of it. Consequently they have 
needed no protection and the high protection given 
them since our Civil War has been purely a gift of 
the right to exact tribute from consumers without 
any equivalent. The case is, therefore, worse than 
that of either of the textile industries of cotton and 
wool. 

It is not necessary to examine other protective 
duties, nor to do more than to explain briefly the 
course of tariff legislation to the period of the Civil 
War. Under the excuse of the necessity for 
increased revenue, protection gradually gained a 
hold upon the American people that has culminated 
in a saturnalia of high protection that has lasted now 
nearly fifty years. It has got such a hold on us that 
we cannot get rid of it at once. We are in the con- 
dition of the toper who, however much he may have 
resolved to reform, has to take another nip the next 
morning, to steady himself. We must get rid of 
protection by easy stages before we can get down to 
free trade (meaning a tariff for revenue only). 

DUTIES ON IMPORTS WERE NOT MADE PAYABLE UPON 
IMPORTATION UNTIL 1 842 

The requirement of immediate payment of duties 
upon landing of imports was not introduced until 



254 Free Trade vs. Protection 

1842. Before then credit had been granted the 
importers for a period varying from three to twelve 
months, thus allowing time to sell the goods im- 
ported and to pay the tax out of the proceeds col- 
lected. A determined effort in 1820 to change this 
system failed of passage. It is no wonder that im- 
porters then grew rich. 

THE TARIFF OF 1 8 24 

This tariff was a success from a revenue stand- 
point, and, to that extent, a failure from the protec- 
tionist standpoint. It raised the duties on cotton 
cloth, which was unnecessary, for the industry was 
firmly established and almost independent of sup- 
port by duties; for, as the use of the power loom 
and other improvements brought the price of coarse 
cotton cloth much below twenty-five cents, the min- 
imum duties became prohibitory. Taussig says that 
the cheaper grades of cotton cloth were produced 
so cheaply and of such good quality that the manu- 
facturers freely asserted that the duty had become 
nominal and foreign competition was no longer 
feared. In other words, a present of more protec- 
tion was made to manufacturers who needed none. 
Of course, this had its effect on woolen and other 
manufactures, as well as on the advocates of protec- 
tion in general, and all clamored for more protection, 
and an earnest effort was made to extend the min- 



Protection Not Necessary 255 

imum system to woolens, but it failed. A great 
reduction in England of the duty on wool, combined 
with an increase here of this duty, enabled the Eng- 
lish manufacturers of woolens to export large stocks 
to this country and to sell them at reduced prices. 
According to Stanwood, this tariff was a thorough- 
going, protective act. How can this be, inasmuch 
as it brought in a larger revenue? 

Stanwood admits that in 1824, besides the cotton 
men who did not want protection, there were also 
woolen manufacturers who did not want it. He 
says, " New England, on the whole, believed that its 
industrial progress did not need a protective tariff." 

Now, surely, the men of that particular section 
of the country who were then engaged in manufac- 
turing — that is, intelligent New England — may be 
supposed to know what they wanted. Therefore, 
when a protectionist admits that in 1824 New 
England did not need a protective tariff, it is evident 
that the manufactures of that region had become 
established and the time had come, under Mill's 
statement as to what circumstances justify protection 
and how long such protection shall last, when pro- 
tection should have been gradually withdrawn; for, 
if an industry cannot continue to live after being fully 
established under protection, it is economic waste to 
keep on taxing the people to maintain an unprofit- 
able business. 



256 Free Trade vs. Protection 

THE TARIFF OF ABOMINATIONS 

This act, passed in 1828, was so called because 
during its consideration it became loaded down with 
amendments proposed by its enemies, mostly south- 
ern members, with the idea that they were so pre- 
posterous that even if adopted as amendments they 
would secure the rejection of the bill as a whole. 
But they were accepted as valuable additions by the 
friends of the bill, although the southern members 
said openly that they meant to make the tariff so 
bitter a pill that no member from New England 
could swallow it. Nevertheless, Webster supported 
it on the ground that, as Massachusetts had been 
led into her manufacturing through protective tariff 
legislation, her resulting industries should now be 
protected. Out of two wrongs he thus made one 
right. 

DISSATISFACTION WITH THE HIGH PROTECTIVE 
TARIFF OF 1828 

In 1829 resolutions protesting against this tariff 
were passed by the legislatures of Virginia, North 
and South Carolina, Alabama, and Georgia. At a 
meeting in Boston the tariff was declared to be par- 
tial, oppressive, and contrary to the spirit of the 
Constitution. Then came the nullification ordinance 
of South Carolina, President Jackson's proclama- 



Protection Not Necessary 257 

tion warning the state of the consequences of any 
attempt to resist the authority of the Government of 
the United States, and the rescission of the nullifica- 
tion ordinance by South Carolina. The revenue of 
the federal government was in excess of its needs, 
and, although another act had been passed by Con- 
gress reducing the average duty to about thirty-three 
per cent and adding about two hundred items to the 
free list, the President called for a further reduction 
to a revenue basis in his annual message in Decem- 
ber, 1832, in which he said, " Those who take an 
enlarged view of the condition of our country must 
be satisfied that the policy of protection must be 
ultimately limited to those articles of domestic man- 
ufacture which are indispensable to our safety in 
time of war." 

THE TARIFF OF 1 832 

So glaring were the injustices of the provisions of 
the tariff of 1828, and so badly did they work, that 
all were dissatisfied and changes in it were soon 
made. In 1832 the minimum-valuation system was 
abolished and woolen goods were subjected to a 
simple ad valorem duty of fifty per cent. Other 
" abominations " of the tariff of 1828 were done 
away with, and wool costing less than eight cents a 
pound was admitted free of duty, although higher- 
priced wools were left subject to a compound duty 
of four cents a pound and forty per cent. Protec- 



258 Free Trade vs. Protection 

tionists are always under insuperable difficulties 
when they seek to protect a manufacture and also 
the material used in that industry. If they would 
protect woolens, beside a duty on woolens they 
should admit wool free or with only a low duty. 
But the Middle West is a sheep-growing country 
and has votes, to retain which wool must be pro- 
tected. This in turn arouses the manufacturers, 
who also have votes. Taussig says that the effect of 
these and other changes was to put the protective 
system back, in the main, where it had been in 1824. 

THE COMPROMISE TARIFF OF 1 833 

The concessions or compromises of this tariff 
have given it this name. Clay, standing for high 
protection, was defeated as candidate for the Presi- 
dency. With the help of Calhoun, the southern 
advocate of free trade, this act was adopted. All 
duties in excess of twenty per cent in the tariff of 
1832 were to have one-tenth of the excess over 
twenty per cent taken off on January 1, 1834; one- 
tenth more was to be taken off on January 1, 1836; 
one-tenth more on January 1, 1838; one-tenth more 
on January 1, 1840; on January 1, 1841, one-half 
of the remaining excess was to be taken off, and on 
January 1, 1842, the other half. After July 1, 1842, 
there would be a uniform rate of twenty per cent on 
everything. That reduction actually took place, and 



Protection Not Necessary 259 

July, 1842, brought us under a tariff of one common, 
uniform rate of twenty per cent. According to lat- 
ter-day calamity howlers and Republican " Publicity 
Leagues," all our mills should have failed or have 
gone out of business. As a matter of fact, they con- 
tinued to run and to declare dividends. What better 
proof is there that they were prosperous and suc- 
cessful? 

THE TARIFF OF 1 842 

Although the tariff of 1833 was passed with the 
intention of establishing a settled policy, and, conse- 
quently, with the expectation that the uniform rate 
of twenty per cent on all imports reached in July, 
1842, should be permanent, yet it lasted only two 
months, from July 1, 1842, to September 1, 1842. 
The tariff of 1842 was known as the Whig tariff, 
and was a party measure. It raised duties, not be- 
cause manufacturers wanted them raised, but because 
the politicians wanted an issue, as Calhoun put it. It 
remained in force only four years and was a mere 
eddy in the now steady stream setting toward free 
trade (meaning by free trade a tariff for revenue 
only). 

THE TARIFF OF 1 846 

This act, better known as the Walker tariff, was 
passed the same year the "corn laws " were repealed 
in England, both countries being on the way to free 



260 Free Trade vs. Protection 

trade (meaning thereby a tariff for revenue only). 
Taussig does not consider this tariff as a free trade 
tariff, but rather as a tariff that effected no more 
than some moderation in the application of protec- 
tion. What a howl would now go up from the pro- 
tectionists of this country at a tariff act that should 
seek to bring about a similar " moderation in the 
application of protection ! " 

For the first time the tariff was divided into let- 
tered schedules, all the articles in one schedule pay- 
ing the same rate of import duty. Articles in Sched- 
ule A were to pay one hundred per cent; those in 
Schedule B, forty per cent; those in Schedule C, 
thirty per cent, and those in Schedule D, twenty-five 
per cent. Schedule C included iron and other met- 
als, manufactures of metals, wool and woolens, etc., 
and Schedule C included cotton goods. Tea and cof- 
fee were admitted free. Again the principle of hori- 
zontal reduction was applied, but with more intelli- 
gence and discrimination. 

It was estimated that this tariff would yield a 
revenue of twenty million dollars, but in 1856 the 
revenue under it was sixty million dollars. Of 
course, to the extent that it yielded a revenue it was 
not protective, and thus Taussig's opinion is justified. 
When protectionists point out the large amount of 
revenue their protective tariffs yield they are incon- 
sistent. The only consistent protectionist is the one 
who always claims that duties should be raised when- 



Protection Not Necessary 261 

ever they yield revenue. It cannot be too strongly 
insisted upon that revenue and protection are incon- 
sistent. If a tariff really " protects" it yields no 
revenue. If a tariff yields a revenue it does not 
11 protect." One year lately one pound of copper 
was imported and paid a duty of five cents. That 
tariff really "protected" copper, and made every 
American consumer pay the same price as if he 
imported his copper, to the enrichment of the copper 
mine owners, the depletion of our natural supply, 
and the loss of revenue by our government, while 
the immense quantities of copper sent abroad were 
sold at a lower price to all foreigners. Such is 
protection ! 

All the chief commercial cities of the country 
increased greatly in population from 1840 to 1850 
and the whole country enjoyed a period of great 
development and prosperity. I will not follow the 
bad reasoning of protectionists and claim that this 
was all due to the tariff. The causes of national 
prosperity and depression are too many, too intri- 
cate and profound, too unknown, and, perhaps, un- 
knowable, for anyone to pick out one cause, the 
tariff, and to make it the one and only cause of our 
prosperity, our panics, and our periods of depres- 
sion. 

THE TARIFF OF 1 857 

The increasing surplus was the chief cause of still 



262 Free Trade vs. Protection 

further reductions in the tariff of 1857. Blaine, in 
Twenty Years in Congress, says: 

The principles embodied in the tariff of 1846 
seemed for the time to be so entirely vindicated and 
approved that resistance to it ceased, not only among 
the people, but among protection economists, and 
even among the manufacturers, to a large extent. 
So general was the acquiescence that in 1856 a pro- 
tective tariff was not even suggested or even hinted 
at by any one of the three parties which presented 
presidential candidates. . . . The Act was well 
received by the people, and was indeed concurred 
in by a considerable proportion of the Republican 
party. 

This tariff was voted for by one Senator from 
each of the states of Maine, New Hampshire, and 
Rhode Island, and by both Senators from Vermont, 
Connecticut, and Massachusetts — staunch Repub- 
licans. Sumner left his sick bed at home and went 
to Washington to vote for the measure. Wilson, 
supporting the bill in the Senate, said: 

We of New England believe that hemp, flax, silk, 
lead, tin, copper, hides, linseed, and other articles 
should be duty free. We are for the reduction of 
the revenue to the actual wants of an economical 
administration of the Government for the depletion 
of the Treasury, now full of hoarded gold. 



Protection Not Necessary 263 

It is refreshing to dwell for a few moments upon 
a period in the history of our tariff legislation when 
the nation was not so tariff-mad as it has since be- 
come. 

Politics did not enter into the question when this 
tariff was adopted, for there was a general agree- 
ment that a reduction was necessary. The members 
from Pennsylvania were the only ones showing any 
desire to the contrary. The division into schedules 
and ad valorem duties, as in the act of 1846, was 
retained. Cotton goods were transferred to Sched- 
ule C, with a duty of twenty-four per cent, and 
certain raw materials were admitted free.* 

From this examination of the alleged necessity 
for protection in this country, after study of Stan- 
wood's forceful book, written from the point of 
view of a protectionist, with study of Taussig's im- 
partial book, written from the point of view of a 
free trader, one believing in a tariff for revenue 
only, the conclusion is forced upon us that in the 
three great industries of cotton, wool, and iron (in- 
cluding steel) there has been no necessity for pro- 
tection for nearly a century. We had outgrown all 
necessity for protection and were on the road to a 
real tariff for revenue only. There was no economic 
reason for a return to protection. 

* Limitation of time and space prevent our following the 
history of the changes in our tariff system since 1857. It ma >' 
be found in Stanwood's work on the tariff, Taussig's Tariff His- 
tory of the United States, and Miss Tarbell's The Tariff in Our 
Times. 



CHAPTER XVII 

THE REMEDY 

A GENERAL HALLUCINATION IN FAVOR OF PROTEC- 
TION OBSESSES THE AMERICAN PEOPLE 

CO possessed of the hallucination in belief in pro- 
^ tection have we become that there are immense 
areas in our country where protection is accepted 
without question (and, of course, without knowl- 
edge) as part of the established order of things, like 
the rising of the sun or the Christian religion, and 
the daring individual who would question either of 
these settled things would be looked upon as more or 
less wanting. In these areas of our country no 
school book is used that presents any view of eco- 
nomics except that of protection, which is always 
taken for granted. All Republican officialdom, espe- 
cially in Washington, has the same attitude on the 
subject. Information having a favorable bearing 
on protection is more easily obtained than that bear- 
ing on free trade. It may be but natural that almost 
every ruling in any department of the government 
extends to the utmost limit in favor of protection. 
This is particularly so with respect to the vigorous 
examination the baggage of everyone, even including 

264 



The Remedy 265 



Americans returning home, is put through upon 
entering the country. 

The administration in Washington is there to 
attend to its duties in governing the country, yet it 
has found time to warn the Iron and Steel Trust of 
the danger it was running in selling here for thirty- 
five dollars what it sold abroad for twenty-two dol- 
lars a ton. 

DECADENCE OF THE REPUBLICAN PARTY 

It is only a few years ago that a photograph was 
taken of Mr. Roosevelt surrounded by some of the 
leading members of the Republican National Com- 
mittee, possibly members of the Executive Commit- 
tee, all standing on the steps of the White House. 
It required but little knowledge of current events 
in the country at large to enable one to realize that 
among the group thus standing with the man now 
posing as the leader of a reform movement were 
several men who, if they had received their just 
deserts, would have served a sentence in prison. To 
this pass, principally through the corrupting influ- 
ence of protectionism, the alliance of big business 
interests and politics, has come the great party of 
moral ideas, the Republican party, that saved the 
Union and emancipated the slaves ! 

The tone of lofty superiority and complacent 
conceit of protectionism was well illustrated by the 
attitude of Chairman Payne when tariff hearings 



266 Free Trade vs. Protection 

were held in 1909 before the Committee on Ways 
and Means. If a witness showed a disposition 
towards any reduction in duties he was discour- 
teously hectored and bullied, unless he were a man 
like Carnegie, of too great character and influence 
to be so treated. Senator Bacon said, in a speech 
before the Senate, May 7, 1909 : 

If any Senator stands in his place and suggests 
that a certain rate of duty is the proper revenue rate, 
he is met with jeers and laughter and sneers by 
Senators on the other side who recognize that a 
tariff law is nothing but the means by which to 
despoil the public and distribute the spoils among 
favorites. They have become so absolutely wedded 
to the idea that the chief and only function of a 
tariff bill is a means to gather spoils from the people 
and distribute them among the protected industries 
carried on by private personal enterprise, which it 
sought to thus enrich at the public expense, that they 
fail to realize or remember that there can be such a 
thing as a tariff framed to raise the revenue required 
by the Government. 

THE LACK OF MORALITY IN PROTECTIONISM 

Listen to the words of a Republican protectionist, 
Senator Dolliver:* 

Is it possible that a man, because he voted for the 
Allison tin-plate rate of 1889, and heard poor Mr. 

* Cited by Miss Tarbell, The Tariff in Our Times, p. 356. 



The Remedy 267 



McKinley dedicate the first tin-plate mill in America, 
can be convicted in this Chamber of treachery to the 
protective tariff system, if he desires that schedule 
reexamined after seeing the feeble enterprise of 1890 
grown within a single decade to the full measure of 
the market place, organized into great corporations, 
overcapitalized into a speculative trust, and at length 
unloaded on the United States Steel Company, with 
a rake-off to the promoters sufficient to buy the Rock 
Island system? If a transaction like that has made 
no impression upon the mind of Congress, I expose 
no secret in saying that it has made a very profound 
impression on the thought and purpose of the Amer- 
ican people. ... So far as I am concerned, I am 
through with it. I intend to fight it; ... I intend 
to fight without fear — I do not care what may be 
my political fate. I have had a burdensome and 
toilsome experience in public life now these twenty- 
five years. I am beginning to feel the pressure of 
that burden. I do not propose that the remaining 
years of my life, whether they be in public affairs 
or in my private business, shall be given up to a dull 
consent to the success of all these conspiracies, which 
do not hesitate before our very eyes to use the law- 
making power of the United States to multiply their 
own profits and to fill the market-places with wit- 
nesses of their avarice and greed. 

Miss Tarbell says : 

The history of protection in this country is one 
long story of injured manhood. Tap it at any point 



268 Free Trade vs. Protection 

and you will find it encouraging the base human 
traits — greed, self-deception, indifference to the 
claims of others. Take the class chiefly involved in 
making a tariff bill — the suppliants for protection. 
We have seen in previous chapters the ends they 
seek, the methods they employ. What kind of men 
does this make? It makes men deficient in self- 
respect, indifferent to the dignity and inviolability of 
Congress, weak in self-reliance, willing to bribe, 
barter, and juggle to secure their ends. All this is 
on the face of the activities of men who run their 
business through Congress. 

Dip into the story of the tariff at any point since 
the Civil War and you will find wholesale proofs of 
this bargaining in duties: rates fixed with no more 
relation to the doctrine of protection than they have 
to the law of precession of the equinoxes. The actual 
work of carrying out these bargains is of a nature 
that would revolt any legislator whose sensitiveness to 
the moral quality of his acts has not been blunted — 
who had not entirely eliminated ethical considera- 
tions from the business of fixing duties. And this is 
what the high protectionist lawgiver has come to — 
a complete repudiation of the idea that right and 
wrong are involved in tariff bills. There is no man 
more dangerous, in a position of power, than he who 
refuses to accept as a working truth the idea that 
all a man does should make for Tightness and sound- 
ness, that even the fixing of a tariff rate must be 
moral. But this is the man the doctrine of protec- 
tion as we know it produces, and therein lies the 



The Remedy 269 



final case against it — men are worse, not better, for 
its practice.* 

PRESIDENT TAFT'S SO-CALLED TARIFF BOARD 

In Section 2 of the Payne-Aldrich tariff act of 
1909 it is provided that the general tariff rules pre- 
scribed in that law shall be the minimum rates ; that 
an additional rate of twenty-five per cent ad valorem 
shall be charged upon all imports until the Presi- 
dent, after investigation, shall determine whether 
any country is discriminating against this country in 
its tariff, etc. ; and at the end of this section there is 
this provision: "To secure information to assist the 
President in the discharge of the duties imposed 
upon him by this section, and the officers of the gov- 
ernment in the administration of the customs laws, 
the President is hereby authorized to employ such 
persons as may be required."! The President was 
not authorized to appoint a Tariff Board to report 
to Congress, etc., but he was merely authorized "to 
employ such persons as may be required " to enable 
him to find out whether any foreign country was 
discriminating against the United States in its tariff 
laws. The President read into this clause much 
more than it contained and repeatedly assumed that 
Congress should not make any changes in the tariff 
until the particular change should have been investi- 

* Tarbell, The Tariff in Our Times, pp. 358, 363. 

t Document 671, Sixty-first Congress, 2nd Session, p. 771. 



270 Free Trade vs. Protection 

gated by these men appointed for another purpose 
and whom he has chosen to call a Tariff Board. The 
country at large, misled by the President's assump- 
tion, has apparently adopted the mistaken notion 
that this was a real Tariff Board. 

ARBITRARY, UNJUST POWER OF A CONFERENCE 
COMMITTEE 

It seems strange that strong opposition has not 
been developed against a rule of procedure by Con- 
gress that is certainly against common right. I refer 
to the power exercised by a Conference Committee 
when the two houses are unable to agree. Thus the 
House may fix a certain rate in a tariff bill, which 
rate may be increased or diminished in the Senate by 
an amendment. There being thus a disagreement 
between the two houses, the measure goes to a con- 
ference committee. One would naturally suppose 
that the conferees would only have power to report 
in favor of the lowest rate or the highest rate that 
passed one chamber or the other, or to report in 
favor of a rate somewhere between the highest and 
the lowest. But, no ! The conferees may report a 
rate lower or higher than the lowest or highest pro- 
posed. As the report of the conferees cannot be 
amended, but must be adopted or rejected as a 
whole, this amounts to giving power to the conferees 
to fix the rates. Congress might as well leave the 



The Kerne dy 271 



rate to be determined by a joint committee in the 
first instance, and then, abandoning all power of 
amendment, adopt or reject the rate determined by 
that committee. This enormous power in the hands 
of conferees is exactly what u big business" wants, 
for it can quietly and without publicity arrange rates 
as it wants them to be, with the conferees. It can 
even secure the appointment of its friends on this 
committee. 

The tariff bill of 1883, * n consequence of dis- 
agreement between the two chambers of Congress, 
went to a conference committee and their report was 
presented to the Senate, March 2, only one day 
later, obviously giving no time for a real attempt to 
come to an understanding based upon a compromise 
or settlement of differences. Stanwood tells us:* 

There was an outburst of indignation and protest 
by the Democratic senators at the liberal construc- 
tion placed by the committee upon its powers. In 
several instances, particularly in the schedule of iron 
and steel duties, the committee had reported higher 
rates of duty than had been voted either by the 
Senate or by the House. . . . The report was con- 
curred in by a vote of yeas 32, nays 31. 

If it be claimed that this was exceptional because 
the Senate made only one amendment that embraced 
a whole tariff, there are other instances. Thus, 

* American Tariff Controversies in the Nineteenth Century, 
vol. 1, p. 216. 



272 Free Trade vs. Protection 

when the Dingley act of 1897 was under considera- 
tion, Stanwood says:* 

The bill was sent at once to a conference committee 
which had to consider no less than 872 amendments 
made by the Senate. The report was made to the 
House on July 19. About four-fifths of the Senate 
amendments were agreed to. The general result was 
that the higher rate of duty was that finally adopted, 
so that the bill as it was passed established higher 
rates than either the House or the Senate bill. 
The conference report was adopted by yeas 187, 
nays 116. 

Other instances could be given, but it is not neces- 
sary. Such an arbitrary power in the hands of a 
temporary conference committee, and thus not re- 
sponsible for its action, is a complete abrogation of 
all true Democratic or Republican doctrines of a 
government of the people, by the people, for the 
people, and should be stopped. 

WHAT IS A CENT TO A CONSUMER? 

There are many families in this country (as well 
as others) living on such small incomes that a rise 
of a cent in the price of many a necessary article of 
food and clothing makes a material difference to 
them. It should be remembered that in every coun- 
try the great majority, the hard-working, industrious 

* American Tariff Controversies in the Nineteenth Century, 
vol. 2, p. 388. 



The Remedy 273 



men and women, are poor. There are many million 
families in the United States whose members do not 
receive an average wage of five hundred dollars a 
year. To accumulate anything in order to provide 
against sickness and old age they must practice a 
thrift that is mean and cruel, without the requisite 
training, self-denial, and intelligence necessary to 
real, intelligent thrift. The majority of Congress- 
men who have fixed the prices of these people's food 
and clothing for the last half century, through tariff 
legislation, have no intelligent appreciation of their 
necessities and limitations. They are only " ultimate 
consumers," not suffering, struggling men and 
women, to whom a cent often means a great deal. 
Miss Tarbell says:* 

If one would know with something like scientific 
precision what it means for a family to live on $500 
or less a year in a city like New York, for instance ; 
if he would realize the relation of a rise of even a 
cent in the cost of a necessity to the comfort of the 
multitude of working girls in this country on $6.00 
and $8.00 a week, he should study the various investi- 
gations recently made into the budgets of these two 
classes. They demonstrate that if one is to take care 
of a family of five persons in Nlew York city on 
$500 a year, or of himself on a wage of $6.00 or $8.00 
a week, he must think before he buys a penny news- 
paper, and he must save and plan for months to get 

* The Tariff in Our Times, p. 260. 



274 Free Trade vs. Protection 

a yearly holiday for the family at Coney Island; 
that there is practically no possibility of a nest egg 
or of schooling for the children beyond fourteen 
years of age, that sickness means debt or charity, 
and that the accumulation of those things which 
make for comfort and beauty in a home is out of 
the question. To these families an increase of a cent 
in the price of a quart of milk is something like a 
catastrophe. To these girls, every penny added to 
the cost of food, of coal, of common articles of 
clothing, means simply less food, less warmth, less 
covering, when at the best they never can have 
enough of any one of these necessaries. 

HOW A TARIFF SHOULD BE MADE 

This was illustrated twenty years ago in a speech 
by Henry Watterson, as follows: 

By the aid of all the best experts and authorities I 
would get together all the needful statistical data. 
I would then find a clean sheet of paper. I would 
lay this on the table — not the little round one, but 
the big oblong table — in the Ways and Means Com- 
mittee room. Then I would open the cupboard 
containing, among other perishable contents, the 
McKinley bill. I would take this out, none too gently, 
and pitch it into the fire. Then I would draw upon 
my clean piece of paper three lines. Thus : 

Article Duty Revenue 

I I i 

1 I I 

2 I I 



The Remedy 275 



I would begin at the top of the first column with 
sugar. Then the duty — say, one cent a pound. 
Then the estimated revenue — say, $35,000,000. Then 
I would abolish the sugar bounty, making a differ- 
ence of $45,000,000 in the revenue. I would follow 
with tea and coffee. I would continue, giving prece- 
dence as far as possible to revenue-yielding com- 
modities not produced in this country, down through 
the largest revenue-yielding domestic products — 
without the least regard to protection, incidental or 
otherwise — and when I got $200,000,000 I would 
stop. Then I would take another bit of white paper, 
and I would frame an Internal Revenue Act, 
raising $175,000,000 on spirits and tobacco — making 
$375,000,000 in all; and the rest — $50,000,000 
or $75,000,000, as the estimate might require — I 
would raise by a tax, first on inheritance and divi- 
dends, and then, if needs required, on big incomes. 
Then I would call the committee — the Democratic 
members of the committee, I mean — and, when 
any one of them proposed to confuse the simplicity 
of this perfectly plain Tarifif-for-Revenue-only-Act 
by the old cant about the danger of being too pre- 
cipitate and extreme, I would knock him out — not 
down — by saying: Read the National Democratic 
Platform. 

I do not cite this as a perfect model, but rather on 
account of its common sense and vigorous English. 
It errs, also, in omitting to dwell upon the necessity 
of keeping a proper relation between excise duties 
and tariff duties. 



276 Free Trade vs. Protection 

NATIONAL TARIFF COMMISSION ASSOCIATION 

This association has for its object, u To promote 
the creation of a permanent non-partisan Tariff 
Commission." 

At the fourth annual meeting of this association, 
held in New York, December 3, 19 12, the president, 
John Candler Cobb, delivered the annual address, 
in which he said, " Congress is the tariff-making 
body and no commission or board can fulfill its des- 
tiny until it is squarely and fully accepted by Con- 
gress as a part of its tariff-making machinery." 

Following this report it was unanimously re- 
solved : 

That the report of the President of the Associa- 
tion is hereby accepted and approved and that this 
Board reaffirm its advocacy of legislation by Con- 
gress designed to create a permanent non-partisan 
tariff commission, responsible both to Congress and 
the President, to gather, tabulate, digest, and report 
technical and statistical facts pertinent to the tariff 
schedules, for the continuing use of Congress in the 
framing of the tariff laws, and for the guidance of 
the President in passing upon tariff bills and in nego- 
tiating commercial treaties with other nations, and 
that we urge that legislation to this end should be 
enacted by Congress. The necessity for such a com- 
mission is imperative, whether or not the tariff is to 
be immediately revised, upon information procurable 
by existing methods. 



The Remedy 277 



There is no better way to judge of the future 
than by examining the experience of the past as to 
the same matter. Judged by this test it does not 
seem probable that Congress will be guided by the 
suggestions of a tariff board, however able its mem- 
bers may be and however wise the course it may 
suggest. For we have had tariff boards in the past 
composed of able members and they have made wise 
suggestions which Congress has seen fit to disregard. 
Is there any reason to suppose it will not continue 
to disregard the suggestions of a tariff board? For 
there is always the danger that, however thorough- 
going may be the professions of members of Con- 
gress in favor of free trade (meaning a tariff for 
revenue only), there will always be some renegades 
among them who will desert their professed prin- 
ciples to secure protection for something in their 
own state or district, without whose support and 
votes they cannot continue long in Congress. 

It may be that the treachery of these renegades 
can be prevented by passing only one short tariff 
act at a session, one that shall deal with only one 
class of duties. This would prevent the usual log- 
rolling by which protection is secured for the par- 
ticular industry in a member's district in return for 
protection accorded to another industry in the other 
member's district, thus securing protection for both 
contrary to the will of the majority against protec- 
tion in the abstract. Or it may be necessary to 



278 Free Trade vs. Protection 

introduce a complete, scientific tariff act covering 
the whole ground, framed by disinterested experts, 
and to secure its adoption or rejection as a whole, 
without amendment, by a vote to that effect first 
passed by both Houses. 

WHAT TARIFF REFORM IS 

Tariff reform calls for more than lowering a duty 
here and there, more than appointing a tariff board, 
more than negotiating a reciprocity treaty, good as 
all these may be. It calls for an intellectual and 
moral revolt against the entire system of protection 
as we know it. No leader can accomplish the work 
needed who does not go to the fight hot with indig- 
nation at the intellectual jugglery which has swamped 
the protective principle and weakened the country's 
capacity for sound political thinking and its keenness 
for distinguishing moral values. Never until such a 
revolt comes will the clutch of the greedy beneficiaries 
of the system be wrenched loose. The wrong done 
to mind and morals is a far more serious matter than 
any damming up of trade the policy produces. That 
at most can endure but a few generations. The laws 
of trade are too powerful to be long interrupted by 
unnatural barriers like prohibitive tariffs. They 
finally flow over them as a river over a dam, and 
eventually toss them aside like the drift they are. 
That is, all tampering with liberty and truth comes 
sooner or later to naught. True, in the meantime the 
people bear the burden. True, the end of all indus- 
trial progress — that is, the fair distribution of a 



The Remedy 279 



production sufficient to keep in health and happiness 
the people of all the earth — is put off; but that is 
less serious than the deterioration of intellectual and 
moral integrity which it has required to build up our 
dishonest and inhuman tariff laws.* 

THE REMEDY 

It must be borne in mind in everything that is 
done in tariff reduction, that our ultimate aim is a 
tariff for revenue only. If on the way to that end, 
protection, incidental or otherwise, still is allowed 
to continue, it is only as a necessary and incidental 
evil, tolerated only out of a tender regard for vested 
interests. If any mistake is made, it should be 
rather in too tender regard for industries that, 
although they are pauper industries, have been 
undertaken because of the over-protection extended 
to them during the last half century, and this entitles 
them to consideration in making changes in the 
tariff, even though so extended at their own request. 
Nor must we forget that the reduction and removal 
of excise duties without reduction of tariff duties at 
the same time on the same products has resulted in 
total disregard of the relation between the two. 
We must, therefore, look also to the re-imposition 
of internal revenue duties. The first thing to be 
done is to enlarge the free list, especially as to 
articles that yield little or no duties. Next there 
* Tarbell, The Tariff in Our Times, p. 329. 



280 Free Trade vs. Protection 

should be unflinching, substantial reductions all 
along the line on the textile industries in cotton and 
wool and in iron, steel and copper industries that 
have been over-protected ever since the Civil War. 
Here horizontal reductions extending over a series 
of years will ease those who are still carrying on 
business as pauper industries, while those who are 
not carrying on business as pauper industries cer- 
tainly do not need protection. All "jokers," mis- 
leading rates and discriminations should be re- 
moved and the whole tariff should be put in plain 
language that all can understand. Surely if such 
an instrument as the Constitution can be and is so 
written, a tariff act can be also. Yet it has not yet 
been done, not at least since protectionism has 
overridden everything. 

While it is often stated that the highest taxes 
should be placed on articles of luxury and the lowest 
upon the necessaries of life that all use, it must be 
remembered that this will not bring in either a large 
revenue or a regular one, as will taxes on articles 
that everyone uses. A combination of both systems 
is therefore necessary. 

It is further evident that an income tax has be- 
come a necessity if we are to continue the enormous 
and increasing expenditures of our federal govern- 
ment. This is inevitable, but is nevertheless greatly 
to be regretted, for an income tax calls for submis- 
sion of every one's private affairs to the scrutiny of 



The Remedy 281 



a set of office holders, to whom one would never 
otherwise think of submitting them, men too often 
holding their little offices as their reward for polit- 
ical work done for their superiors. Such submission 
of one's private accounts to such petty office holders 
is not in accord with our notions of personal liberty 
and freedom from control by the Government in 
the conduct of our own business. Perhaps the diffi- 
culty will be remedied by the selection of men of 
better character for these offices through civil service 
examinations. 

I have not gone into an examination of the vexed 
questions of specific and ad valorem duties because 
I do not consider that they have to do with protec- 
tion or free trade. There are protectionists who 
insist upon specific duties, and there are protection- 
ists who insist upon ad valorem duties, just as there 
are free traders (meaning those who stand for a 
tariff for revenue only) who insist upon specific 
duties and there are free traders who insist upon 
ad valorem duties. It is probable that, as in the 
past, experts who must necessarily be called upon 
to complete the details of any tariff act, will advise 
a judicious combination of specific and ad valorem 
duties. 

DIFFERENT KINDS OF HORIZONTAL REDUCTION 

There are many different plans for horizontal 
reduction. Suppose, for instance, that all articles 



282 Free Trade vs. Protection 

placed in one schedule or list undergo a reduction 
of five per cent from the present rates for the next 
ten years; that all articles placed in another list 
undergo a reduction of ten per cent from the present 
rates for five years; that articles in another list 
undergo a reduction of fifteen per cent from the 
present rates for the next four years; that articles in 
another list undergo a reduction of twenty per cent 
from the present rates for the next three years, etc. 

Some kind of an automatic horizontal reduction 
scheme may be devised under which the rates of 
duty in certain schedules would be lower (or 
higher) from year to year (or other period of 
time) in proportion to the revenue yielded during 
a past period from those articles. After a few such 
reductions, the information furnished by the results 
would enable Congress to estimate more accurately 
than is now possible the revenue for future years. 
This is a prime necessity in the intelligent prep- 
aration of a budget of probable receipts and 
expenditures. 

Or, suppose imports were divided into schedules 
or classes, putting into the same clas in each case 
those articles on which duties should be alike. Sup- 
pose on all articles in class 1 there should be a 
horizontal reduction in duties of two per cent per 
annum for — years; on all articles in class 2 there 
should be a horizontal reduction of duties of three 
per cent per annum for — years, and so on through 



The Remedy 283 



the list until, at the end of the list, on all articles in 
class 49, there should be a horizontal reduction of 
duties of fifty per cent on present rates. Of course 
there will be great objection made to such a plan 
— but what plan would there not be objection to? 
It is evident that no plan can succeed until the ma- 
jority in favor of reduction is so large that no 
defection for the purpose of securing protection on 
the particular product of one district or even of 
several districts could defeat the measure as a whole, 
or force surrender to such local demands. 

HORIZONTAL REDUCTION 

The Compromise tariff of 1833 did away with 
some of the bad features of the tariff of abomina- 
tions of 1828, by a horizontal reduction of all duties 
above twenty per cent, gradually, until they should 
be reduced to twenty per cent. In 1846 the Walker 
tariff made horizontal reductions. The Dawes bill 
of 1872, a thoroughly Republican measure proposed 
by a sound Republican protectionist, made horizon- 
tal reductions of ten per cent all along the line. 
Yet when horizontal reduction was proposed by 
Morrison in 1884, a howl went up from protec- 
tionists who were by this time on the road to " pro- 
tection for protection's sake." It was vehemently 
denounced by them as crude, vicious, visionary, revo- 
lutionary, wicked, cruel, unscientific, and theoretical, 



284 Free Trade vs. Protection 

although they had supported it when submitted as 
part of the Dawes bill. One objection to horizontal 
reduction is that it can be easily revoked by a later 
Congress without arousing public attention, as hap- 
pened in 1875, when the ten per cent reductions of 
1872 were repealed. However, this would not be 
so easy, now that the attention of the country is 
aroused to the tariff. 

Notwithstanding the liability of a system of hori- 
zontal reduction to repeal, the fact that the system 
of such reductions in the compromise tariff of 1833 
continued in force and the reductions were regularly 
made until 1842 shows that practically such a plan 
works well. It has the further advantage of not 
barring a change should occasion arise. 

Horizontal reduction was applied again in the 
Walker tariff of 1846. Other instances of at least 
partial horizontal reduction in duties come to light 
upon studying past tariffs. Thus, in the act of 18 19 
a horizontal reduction on all woolens from the pre- 
vailing rate of twenty-five per cent to a uniform 
rate of twenty per cent was made. It seems prob- 
able that the vigorous opposition to horizontal re- 
duction in 1884, when compared with the little 
objection to such a reduction in the Dawes bill of 
1872 was due to the increasing boldness of protec- 
tionism in opposing any suggestion of a change look- 
ing to reduced duties, rather than to any inherent 
fault in the horizontal reduction itself. Perhaps the 



The Remedy 285 



system is capable of application in a different way 
from any yet suggested, as indicated above. 

HOW TO GET RID OF PROTECTION 

At the end of the Civil War there was not only 
an enormous debt, there was a premium on gold, 
and it continued for years. We had suspended 
specie payments and the problem was how to get 
rid of the premium and resume payments in specie. 
We were told that the way to resume was to resume, 
and we decided to try it. When the time came we 
woke up the next morning and found everything 
going on just as if nothing had happened. Is it not 
equally true that the way to get rid of protection is 
to throw it off ? That is what we did in this country 
when we adopted our Constitution. Stanwood says : 
" Great Britain passed within a few years from the 
state of the most tariff-protected community to one 
of almost absolute free trade." * Although a pro- 
tectionist, he makes no claim that Great Britain was 
injured thereby. 

If we, a weak, young nation when first born, were 
able to throw aside all protection among the states, 
without injury to any one, now that we are one of 
the most powerful of all nations, if not the most 
powerful nation on earth, cannot do what England 

* American Tariff Controversies in the Nineteenth Century, 
vol. 1, p. 4. 



286 Free Trade vs. Protection 

did when she was a much less rich, powerful, and 
populous country than we now are, then indeed our 
condition is lamentable. The plain English of it 
all is that there is a great deal of nonsense and 
humbug in the talk about the necessity of a slow, 
gradual reduction of the tariff until we get down to 
a free trade basis (meaning a tariff for revenue 
only). Of course the notion is encouraged by pro- 
tectionists and their organs. I am inclined to think, 
however, that the basis for the belief is less founded 
upon protectionist views than upon the innate con- 
servatism of the American people, that, under the 
careful, skillful, long-continued misrepresentations 
of protectionists, has led them to think that down- 
ward revision of the tariff must be gradual or injury 
would result. In saying this, I wish it distinctly 
understood that I am not in favor of great and 
sudden reductions in our tariff duties. In deference 
to public opinion and the possibility of injury to 
vested manufacturing interests, I agree that reduc- 
tions must not be great nor sudden. There is no 
danger they will be too great nor too sudden. The 
army of lobbyists in Washington, and of Congress- 
men with a very tender and peculiar regard for the 
interests of their own constituents (without which 
they would not be in Congress), will effectually pre- 
serve all vested rights from injury, whatever hap- 
pens. But there is no lobby representing the 
interests of the consumers of the country, and all too 



The Remedy 287 



many Congressmen who want free trade in every- 
thing except in herrings. There are few who are 
real statesmen and can rise to the occasion and insist 
upon the adoption of a policy that will finally result 
in free trade (meaning a tariff for revenue only). 

What is needed more than anything is the 
arousing the American people to the benefits to the 
whole country by the substitution of a free trade 
policy (meaning thereby a tariff for revenue only) 
in the place of the false, debasing, corrupting, ener- 
vating policy of protection that has almost succeeded 
in making us the economic slaves of the great trusts 
and other corporations. Let us put an end to the 
political immorality, the intellectual atrophy, and 
the selfish greed of protectionism. 



INDEX 



American colonies and protec- 
tion, ioo. 

American people obsessed in 
favor of protection, 264 ; need 
of arousing, 287. 

American Protective Tariff 
League, 77. 

American Revolution caused by 
protective legislation, 99. 

American system, the true, 3, 
147; the false, 147, 151. 

American Tariff Controversies 
in the Nineteenth Century, 
Stanwood, quoted, 10, 22, 97, 
115, 127, 174, 214, 215, 216, 
263, 271, 272, 285. 

Annals of Congress, quoted, 36, 
37- 

Appleton, Nathan, on tariff dis- 
asters, 143. 

Asbestos, 50 

Bacon, Senator, speech on the 
tariff, 144; arraignment of 
protectionist senators, 266. 

Balance of trade theory, 27, 68, 
69, 70. 

Bastiat, quoted, 63-65. 

Bessemer, Sir Henry, and steel 
process, 251, 252. 

Blaine, J. G., on the tariff of 
1846, 1856, 262; on American 
labor, 188. 



Bounties, unconstitutional, 150. 

Bowditch, J. B., and customs 
receipts of 1816, 218. 

Borax, results of protecting, 
46, 47. 

Brandeis, Lewis D., appearing 
for consumers, 159. 

Bright, John, on protection, 130. 

Bulletin of Wool Manufactur- 
ers, quoted, 229. 

Business the universal, 175; de- 
fined, 176. 

Business interests, influence on 
legislation, no, 117. 

Canada, alienated by tariff 

laws, 57. 
Carey, H. C, on protection, 

139; false view of panics, 141. 

Carlisle, J. G., on free trade, 

9. 
Carnegie, Andrew, on labor, 

186. 
Clay, Henry, quoted, 36; and 

"the American System," 151. 
Cleveland, Grover, and the Wil- 
son Tariff Reform Bill, 119; 

on the tariff, 182. 
Cloth, deterioration of, 153, 154. 
Cobb, John G, on congress as 

a tariff-making body, 276. 
Cobden Club, 76, 178. 



289 



290 



Index 



Coercion, accompanying tariff 
legislation, 123. 

Colbert and the French mer- 
chants, 61, 62; exponent of 
the "mercantile theory," 68. 

Commerce, chapters, 18-71 ; il- 
lustrated, 18, 19; mercantile 
theory of, 21 ; between men, 
not nations, 21, 27; mutually 
beneficial, 23, 28, 30, 53, 54; 
economy of, 38, 39, 58; fet- 
ters on, 39; illustration of 
mutual economy, 59, 60; dim- 
inished by protection, 155. 

Compromise tariff of 1833, 258, 
283. 

Conference Committee, arbi- 
trary power of, 270, 271. 

Constitution of United States 
on imposts or duties, III. 

Consumer, burden on through 
protection, 125-127, 134-139; 
yearly overcharge to, 145, 
149 ; what he wants, 164, 165 ; 
how he suffers, 170; foreign 
consumers, 171 ; exploited by 
mine owners, 174; annual 
financial burden due to protec- 
tion, 171 ; and woolen goods, 
227, 228; heavy tax on from 
protection of iron industry, 
246, 250; no lobby represent- 
ing, 286; despoiled by tariff 
bill laws, 266; what a cent 
is to, 272, 273. 

Cooley, Judge, on taxes for rev- 
enue, 129. 



Corruption through protection, 
of parties, 119, 121; at the 
polls, 121 ; of senators, 123. 

Cotton, manufacturing, and 
tariff of 1816, 211 ; growth of 
industry, 212, 213, 219, 220; 
beginning of spinning, 212; 
meeting foreign competition, 
218; weak mills apply for 
protection, 219; and a low 
tariff, 220; successful manu- 
facturers and tariffs, 219, 221 ; 
protection not needed by, 222- 
226, 263 ; granted unnecessary 
protection, 254; substituted 
for wool, 239, 240; trans- 
ferred to "Schedule C," 263. 

Customs, defined, 41, 42. 

Dawes Bill, 283, 284. 
Democratic tariff reformers, 

119, 120. 
Diamonds, 51. 
Dickens, Charles, on prosperity 

in New England, 81. 
Dingley Act, and Conference 

Committee, 272. 
Dolliver, Senator, appeal for 

change of schedules, 266, 267. 
"Dumping," the bugaboo, 65-67. 

Emerson, R. W., on the basis 
of political economy, 74. 

England benefited by free 
trade, 75; a free trade coun- 
try, 75- 

Excise duties, 108. 



Index 



291 



Exports, increase attended by 
increase of imports, 32-34; 
mistaken views of, in rela- 
tion to imports, 42, 43. 

Fairchild, Representative, quo- 
ted, 13. 

Foreign inferiority and pro- 
tection, 162. 

"Foreigner pays the tax," idea, 
76. 

Franklin, Benjamin, quoted 
for protection, 92, 93. 

Free Exchange, benefits of, 
62, 63. 

Free trade, defined, 5, 6, 7, 15, 
16 ; between states, 20, 55, 56 ; 
proper sense of term, 39; a 
peace measure, 52, 53; ex- 
ample of successful working, 
54; what absolute can do, 63- 
65; chapters on, 72-98; the 
natural condition, 72; "a 
mode of liberty/* 72; an ac- 
tual fact in the United States, 
72-74; favorable to the maxi- 
mum of production, 78; 
means freedom of trade sub- 
ject to necessary taxation, 
81 ; our prosperity under, 82, 
83; of universal application, 
88; advantages following, 89, 
90; natural, 90, 91 ; a relative 
term, 92; adopted with the 
constitution, 101 ; need of a 
free trade policy, 287. 



Fruits of American protection, 

The, 171. 
Frye, Senator, quoted, 13. 

Gallatin's Report, story of hat 
industry, 80. 

Gallinger, Senator, on protec- 
tion of American labor, 188. 

Gardner, A. P., quoted, 70. 

Garfield, J. A., on selfishness 
accompanying appeals for du- 
ties, 123. 

George, Henry, his story of 
some protectionists and the 
customs, 95, 96. 

Gladstone, W. E., on the tariff, 
114; on American protective 
system, 128. 

Gold and protection principles, 
44; as an "infant industry," 
44, 45; its hoarding, 68; and 
California, 69, 70. 

Gorman- Wilson tariff, 141. 

"Great Debate" on Mills tariff 
bill, 181, 200, 201. 

Greeley, Horace, on protection, 

138. 

Grimes, J. W., on the Morrill 
tariff bill and coercion, 123. 

Hamilton, Alexander, report to 
congress on manufactures, 
156, 157. 

History of American Manufac- 
tures, Bishop, quoted, 220. 

Horizontal reduction, 281, 285. 



292 



Index 



Imports, sum of equal to sum 
of exports, 35-38, 43, 44; re- 
quirements regarding pay- 
ment of duties, 253, 254. 

Income tax a necessity, 280. 

Industries, protected, a drag on 
the country, 148; small 
amount of labor engaged in, 
201. 

"Infant industries," 45, 46, 48, 
51, 88, 163, 164. 

Internal revenue duties, reim- 
position of, 279. 

Iron and iron industry, produc- 
tion, 241 ; protective duties, 
241, 242; burden on con- 
sumer, 243 ; growth of indus- 
try, 241-249; results of heavy 
duty, 246-249; and anthracite 
coal, 247; needed no protec- 
tion, 252, 263. 

Iron and steel trust, prices here 
and abroad, 265. 

Is Protection a Benefit? Tay- 
lor, quoted, 123, 124. 

"Jokers," first appearance of, 
211, 235; use of in tariff bills, 
280, 281. 

Labor, American vs. European, 
186-188; productive capaci- 
ties of in different countries, 
187; no need of protecting, 
i£8, 189; President Wilson 
on protection of American, 
191, 192 ; efficiency of Ameri- 



can, 193; conditions under 
high protection, 196; source 
of wealth, 197; small propor- 
tion engaged in protected in- 
dustries, 200, 201 ; wages and 
efficiency, 231 ; cheap, 44. 

Labor and capital organized as 
business, 176. 

Lawrence, Abbott, on tariff dis- 
asters, 143. 

Lectures on the History of 
Protection in the United 
States, Sumner, quoted, 54. 

Lincoln, reputed remark ques- 
tioned, 71; his story about 
his boys, 88. 

"Log-rolling," in congress, 122. 

Longworth, Representative, on 
deterioration in clothing, 153. 

Manufactures of the United 
States, annual output, 144, 
145. 

Manufacturers, get the "prize 
money," 170, 171. 

Meat, American, cheaper in 
England than at home, 136, 
137. 

Mercantile theory of com- 
merce, 21, 67-69. 

Mill, John Stuart, quoted, 62; 
argument for protection, 203, 
204. 

Miles, H. E., quoted, 144. 

Mills, R. Q., on the general 
welfare, 150. 



Index 



293 



Mills Tariff Reform Bill, 119, 

200. 
Money, buying and selling of, 

the universal business, 175. 
Morrill, Senator, on prosperity, 

84. 
Mulhall, facts on productive 
capacities of countries, 187. 

National Tariff Commission 
Association, 276; report of, 
276. 

Natural resources, exhaustion 
of, 48; exploitation of people 
by protecting, 49, 50. 

Nelson, H. L., on congress and 
protectionists, 121. 

New industries not due to pro- 
tection, 80. 

Notes, Taft, 228. 

Olney, Richard, on taxation, 
150. 

Pacific Mail Steamship Com- 
pany and subsidies, 124. 

Panics, 140-144. 

"Pauper Industries," supported 
by protection, 114-117. 

"Pauper labor" of Europe, 163, 
164; dear, 185. 

Perry, Professor, defines free 
trade, 15. 

Philadelphia American, defines 
free trade, 7, 8. 

Pierce, Franklin, on loss 
through protection, 83. 



Politics corrupted by protec- 
tion, 1 18-124. 

Political Economy, Cairnes, 187. 

Political Parties and protec- 
tion, 1 18-124. 

Prices raised by protection, 135, 
138. 

Principles of Political Econ- 
omy, Mill, illustration of 
benefit of free exchange, 62, 
&Z, 204. 

Production, cost of, 77; maxi- 
mum of, 78, 79; capacity of 
factory operatives in differ- 
ent countries, 187. 

Progress of the World, Mul- 
hall, quoted, 187. 

Prosperity, not due to protec- 
tion, 83, 85-87, 157, 158; and 
panics, not due to high or 
low tariff, 140-144. 

Protection, chapters on, 99-183 ; 
so-called "American Sys- 
tem," 2; meaning of, 2, 3, 16; 
as opposed to free trade, 4; 
creates millionaires, 46, 112; 
of "infant industries," 45, 48; 
an interference, 61; absurd 
claims of, 76; prosperity not 
due to, 83, 85-87; artificial, 
90, 91 ; protective legislation 
cause of American revolu- 
tion, 99 ; between the colonies, 
100; asks for more, 101-104, 
160; what it claims, 106-110; 
income from, benefits manu- 
facturers, 112; imposes bur- 



294 



Index 



den on workingmen, 112; is 
it dynamic? 115; leads to po- 
litical corruption, 1 18-128; 
coercion in congress, 129; 
masquerades under false 
name, 128; denies right of 
liberty to trade, 129; incom- 
patible with tariff for rev- 
enue, 130; a system of 
selfishness, 131, 159; and 
special privilege, 133, 137- 
140; artificial stimulus, 146; 
not the American system, 
151 ; cause of deterioration 
and dependence, 152-154; di- 
minishes commerce, 155 ; pro- 
duces unequal distribution of 
wealth, 156; does not cause 
prosperity, 157, 158; does 
not cover all industries, 161 ; 
against the inferiorities of 
the rest of mankind, 162; a 
puling cry, 163 ; sophisms of, 
166, 167, 168-170; how long 
to control at Washington? 
177, 178; pretences of, 181; 
not the cause of high wages, 
189; high, and the condition 
of labor, 196; little gain to 
labor, 202; not necessary in 
the United States, chapter 
on, 203-263; not needed by 
cotton manufactures, 222- 
226; of woolen industry, 
227-237; more sought by 
woolen men, 233-235 ; duties 
on iron, 241; results of, 246; 



retarding better processes, 
250; not needed by iron and 
steel industries, 252, 253; in- 
consistent with revenue, 261 ; 
Americans obsessed in favor 
of, 264; arraigned by Miss 
Tarbell, 267-269; how to get 
rid of, 285-287. 

Protectionism, Sumner, quoted, 
74; 166, 168-170. 

Protectionists, inconsistent, 89, 
260; free traders at heart, 94, 
95 ; ask for more and more, 
101-104; dissatisfied with 
tariff, 144-146, 160; claims 
abandoned by, 178, 179; un- 
fulfilled promises of, 179; 
claims as to American labor, 
195 ; greed of, 234. 

Protective duties, benefit the 
few, 134; impose burdens on 
consumer, 134-139. 

Providence Journal, tariff arti- 
cles by J. B. Bowditch, 218. 

Rayner, Senator, defines free 
trade, 8, 9. 

Redfield, Representative, advo- 
cate of free trade, 77. 

Reed, on Wilson Tariff Re- 
form Bill, 119. 

Report on Manufactures, Ham- 
ilton, 209. 

Republican Party, blunder in 
regard to Canada, 57; break- 
ing pledges, 102, 103 ; com- 
mitted to protection, 104; 



Index 



295 



progress towards protection 
principles, 105 ; repudiates 
old pledges, 180; decadence 
of, 265. 
Roosevelt, Theodore, quoted, 

I, 2, 16; and war. 97. 

Schedules, lettered, introduc- 
tion of, 260 ; in horizontal re- 
duction, 282. 

Slater, Samuel, first successful 
manufacturer of cotton cloth 
with machinery, 212. 

Smith, Adam, quoted, 1, 26, 68, 
146. 

Sophisms of protection, Bas- 
tiat, freedom of trade, 63-65. 

Special privilege, 133. 

Stanwood, Edward, quoted, 10, 

II, 22, 97, 127; on the iron 
industry, 115, 116; on diffu- 
sion of wealth, 158; how 
long is protection to con- 
tinue? 174; paean for protec- 
tion, 183; first tariff schedule 
lobby, 210; on minimum val- 
uation claim in tariff of 
1816, 211; cotton cloth in- 
dustries, 214, 216; and iron 
industry, 250, 251 ; and pro- 
tection of cotton, 255 ; on 
Great Britain's move to free 
trade, 285. 

Steel, the Bessemer process, 
251, 252; needed no protec- 
tion for success of, 252, 253. 



Sugar Trust, legislation to as- 
sist, 149, 150. 

Sumner, Professor W. G., de- 
fines free trade, 15, 72; free 
trade between the states, 55, 
56; designation of protection, 
61 ; free trade not a theory, 
74 ; illustrates protection, 
147; on sophisms of protec- 
tion, 166, 167, 168, 170; tariff 
raising prices, 171 ; finding 
metals, 174. 

Taft, W. H., Tariff Board, 77, 
269, 270. 

Tarbell, Ida M., organization 
of business, no; Mr. Aid- 
rich and the tariff, 139, 140; 
amusing story, 198, 199; 
wools and woolens, 233; ar- 
raignment of protection, 267- 
269; cost of living and value 
of the penny, 273, 274; what 
tariff reform is, 278, 279. 

Tariff, origin of the word, 1 ; 
beginnings, I ; defined, 2 ; 
for revenue with incidental 
protection, n, 12; for rev- 
enue only, 14; prosperity 
under a tariff for revenue, 
81, 82; low and prosperity, 
83, 84; and increase of rev- 
enue, 131 ; nothing to do with 
high wages, 184, 185, 195; 
first tariff in the United 
States, 206-208; history of 



296 



Index 



laws in the United States, 
208, 263; of 1816, 210; first 
lobby for schedules, 210; 
compromise tariff of 1833, 
225, 226, 258 ; Wilson-Gorman 
tariff, 220 ; woolen goods and 
tariff, 227-22,3, 239, 240; of 
1824, 254; of "abominations," 
256; of 1828, 256, 257; of 
1832, 257; of 1842, 259; of 
1846, 259; lettered schedules 
introduced, 260 ; protective 
tariff, and tariff yielding rev- 
enue, 261 ; of 1857, 261 ; re- 
duction advocated, 262, 263; 
Taft Tariff Board, 269, 270; 
how a tariff should be made, 
274, 275; National Tariff 
Commission Association, 276; 
what tariff reform is, 278, 
279; should be for revenue 
only, 279; reduction de- 
manded, 280; horizontal re- 
duction, 281-285. 

Tariff History of the United 
States, Taussig, quoted, 142, 
195, 208, 222, 223, 231, 232, 
235-236, 237, 238, 242, 243, 
244, 245, 246, 248, 249, 263. 

Tariff Board of President 
Taft, 269, 270. 

The Tariff in Our Times, Tar- 
bell, quoted, no, 139, 199, 
200, 233, 263, 266, 267, 268, 
269, 273, 274, 278, 279. 

Taussig, F. W., quoted, 14, 15; 
and country's prosperity, 142, 



143 ; wages argument of pro- 
tectionists, 195 ; first tariff of 
United States, 208; cotton 
manufacturing, 221, 222, 224; 
woolen manufacturing, 231, 
232; iron industry, 242, 243, 
244, 245, 246, 247, 248, 249; 
tariff of 1824, 254; effect of 
tariff of 1828 and 1832, 258; 
tariff of 1846, 260; confer- 
ence committee work of 
1883, 271. 

Trusts, multiplying of, 182. 

Twenty Years in Congress, 
Blaine, quoted, 262. 

Underwood, Representative, on 

American labor, 196. 
United States, most expensive 

country in which to live, 157; 

protection not needed in, 

203-249. 

Wages, chapter on, 184-202; 
high wages defined, 184; not 
due to protection, 189, 201 ; 
in the United States, 190, 
191 ; President Wilson on, 
191 ; lower wages not due to 
lower duties, 192, 193; under 
protection, 194; slight in- 
crease even in highly pro- 
tected industries, 201, 202; 
high wages and better labor, 
231. 

Walker tariff, 259, 260, 283, 
284. 



Index 



297 



Watches, American, cheaper 
abroad than at home, 125- 
127. 

Watterson, Henry, how a tariff 
should be made, 274, 275. 

Webster, Daniel, quoted, 37, his 
argument for free com- 
merce, 96, 97 ; on "the Ameri- 
can System," 151 ; on com- 
mercial avarice, 172. 

Wealth of Nations, Adam 
Smith, quoted, 1, 26, 68, 206. 

Wealth the product of labor, 
197. 

Wells, David A., defines free 
trade, 6. 

Wilson, President, a free tra- 
der, and quoted, 93. 

Wilson, Senator, on reduction 
of revenue in 1857, 262. 



Wilson-Gorman tariff, 220. 

Wilson Tariff Reform Bill, 118, 
119. 

Woolen industry, in the United 
States, 226, 227; protection 
for, 228, and the tariff, 228- 
233, higher duties sought by, 
230, 231, 234-237; protective 
dogma as related to, 233; 
false discriminations in du- 
ties, 237; no necessity for in- 
creased nor for any protec- 
tion, 237,239; tariff duty and 
best wool, 239, cotton substi- 
tutes, 240; granted unneces- 
sary protection, 254, 255, 263 ; 
horizontal reduction for, 284. 

Workingmen, burden on, 112. 

Wright, Carroll D., statistics 
on capital, 83. 



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